MEETING STATE OF CALIFORNIA AIR RESOURCES BOARD
JOE SERNA, JR. BUILDING CALIFORNIA ENVIRONMENTAL PROTECTION AGENCY BYRON SHER AUDITORIUM, SECOND FLOOR 1001 I STREET SACRAMENTO, CALIFORNIA
THURSDAY, JULY 21, 2011 9:00 A.M.
TIFFANY C. KRAFT, CSR CERTIFIED SHORTHAND REPORTER LICENSE NUMBER 12277 CALIFORNIA REPORTING, LLC 52 LONGWOOD DRIVE SAN RAFAEL, CA 94901 (415) 457-4417 APPEARANCES
BOARD MEMBERS Ms. Mary Nichols, Chairperson Dr. John R. Balmes Ms. Sandra Berg Ms. Doreene D'Adamo Mr. Ronald O. Loveridge Mr. Ron Roberts Dr. Daniel Sperling Mr. Ken Yeager
STAFF Mr. James Goldstene, Executive Officer Mr. Tom Cackette, Chief Deputy Executive Officer Ms. Ellen Peter, Chief Counsel Mr. Bob Fletcher, Deputy Executive Officer Ms. Lynn Terry, Deputy Executive Officer Ms. Mary Alice Morency, Board Clerk Mr. Jeff Lindberg, Air Pollution Specialist, PTSD Mr. Andrew Panson, Innovation Strategies Branch, Mobile Source Control Division, MSCD APPEARANCES CONTINUED
ALSO PRESENT Mr. Chris Abarca, Azure Dynamics Mr. Mel Assagai, Navistar Mr. James Chen, Tesla Motors, Inc. Mr. John D. Clements, Kings Canyon Unified Mr. Nicholas Cole, Car2Go North America Mr. Jay Friedland, Zero Motorcycles Mr. Marc Geller, Plug In America Mr. Jamie Hall, Calstart Ms. Bonnie Holmes-Gen, ALA Mr. Matt Sloustcher, CODA Automotive Mr. Reede Stockton, Center for Community, Democracy, and Ecology INDEX PAGE
Item 11-5-1 Chairperson Nichols 3 Executive Officer Goldstene 10 Staff Presentation 11 Board Q&A 27 Mr. Abarca 33 Mr. Chen 34 Mr. Cole 36 Mr. Sloustcher 39 Mr. Hall 42 Mr. Clements 44 Mr. Geller 47 Mr. Friedland 49 Mr. Assagai 50 Board Q&A 54 Motion 77 Vote 78 Item 11-5-3 Chairperson Nichols 79 Executive Officer Goldstene 79 Staff Presentation 81 Board Q&A 90 Motion 95 Vote 95 Item 11-5-4 Executive Officer Goldstene 100 Chairperson Nichols 102 Dr. Froines 108 Dr. Denton 110 Dr. Edgar 114
Public Comment 96 Adjournment 122 Reporter's Certificate 123 1
1 PROCEEDINGS
2 CHAIRPERSON NICHOLS: Good morning, ladies and
3 gentlemen. We have a very nice agenda this morning. It's
4 not every day you get to vote on giving out money and
5 present awards to deserving people. We're very happy to
6 be here.
7 I'd like to open this morning's meeting, before
8 we do the roll call, we will say the Pledge of Allegiance
9 to the flag. Please stand.
10 (Thereupon the Pledge of Allegiance was
11 Recited in unison.)
12 CHAIRPERSON NICHOLS: Thank you.
13 We will now have the Clerk will call the roll.
14 BOARD CLERK MORENCY: Dr. Balmes?
15 Ms. Berg?
16 BOARD MEMBER BERG: Here.
17 BOARD CLERK MORENCY: Ms. D'Adamo?
18 BOARD MEMBER D'ADAMO: Here.
19 BOARD CLERK MORENCY: Ms. Kennard?
20 BOARD MEMBER KENNARD: Here.
21 BOARD CLERK MORENCY: Mayor Loveridge?
22 Mrs. Riordan?
23 BOARD MEMBER RIORDAN: Here.
24 BOARD CLERK MORENCY: Supervisor Roberts?
25 BOARD MEMBER ROBERTS: Here. 2
1 BOARD CLERK MORENCY: Professor Sperling?
2 BOARD MEMBER SPERLING: Here.
3 BOARD CLERK MORENCY: Dr. Telles?
4 Supervisor Yeager?
5 BOARD MEMBER YEAGER: Here.
6 BOARD CLERK MORENCY: Chairman Nichols?
7 CHAIRPERSON NICHOLS: Here.
8 BOARD CLERK MORENCY: Madam Chairman, we have a
9 quorum.
10 CHAIRPERSON NICHOLS: Great. Thank you.
11 Couple of things, housekeeping items. If there
12 is anybody who is here and wishes to testify, I hope
13 you've signed up online or filled out a speaker card. But
14 if you haven't, please do see the clerk and fill out a
15 card.
16 If you have signed up online, you don't have to
17 fill out a card, of course. But we do need you to check
18 in with the clerk so she knows you're here.
19 We will, as usual, impose a three-minute time
20 limit, but we will receive written testimony of any
21 length. And we'd appreciate it if you don't try to read
22 it but just summarize it so you can say within the time so
23 we can really focus on what you have to say.
24 The emergency exits are in the back of room as
25 well as on the side here. In the event of a fire alarm, 3
1 we need to evacuate this room and go downstairs and
2 outside the building until we get an all-clear signal.
3 And I think that is it for housekeeping.
4 So let's get started then with our first item,
5 which is the AB 118 Air Quality Improvement Program
6 funding for fiscal year 2011/2012.
7 This funding plan that we're considering here
8 serves as the blue fingerprint for expending the $40
9 million that we received for incentive projects in the
10 2011 to 2012 State budget, and we're very grateful to have
11 this funding.
12 The plan establishes ARB's priorities for the
13 funding cycle, describes the projects we hope to fund, and
14 sets allocations. This is the third cycle for this
15 program that we call AQIP for short. And it's been a
16 very, very positive program so far. It's been used to
17 introduce the next generation of clean vehicles to
18 California's fleet. We regard these investments as a down
19 payment an our long-term goals for air quality and climate
20 change.
21 Today's proposal builds on the program's past
22 successes and will continue funding for project categories
23 where we're seeing strong consumer demand.
24 Before I turn to Mr. Goldstene to present the
25 staff report, I do want to say a few words that put this 4
1 in context a little bit, because Mr. Cackette and I have
2 just been in Washington for the past several days and have
3 been there previously for about most of the week
4 beforehand working along with the Environmental Protection
5 Agency, U.S. Environmental Protection Agency, and the
6 National Highway Transportation Safety Administration as
7 well as members of the Obama administration to try to see
8 if we can put together a comprehensive package of
9 regulations for both greenhouse gases and fuel economy for
10 the period 2017 through 2025.
11 As everybody on this Board well knows, our
12 standards really were instrumental in moving the
13 administration to adopt national standards back in 2009.
14 And we were all thrilled in May 2009 when we were able to
15 be participants in this one national program that is in
16 effect for the model years through 2016. And it's
17 basically took the California greenhouse gas emission
18 standards and applied them on the national level and also
19 established a cafe standard that will get us to, on paper
20 at least, 35 miles per gallon as an average for the
21 country.
22 President Obama has announced his goal of
23 doubling that by 2025. There are various ways this number
24 gets expressed or translated in terms of percent
25 improvement per year or percent miles per gallon or 5
1 whatever.
2 But the bottom line is here the intent is to have
3 a very ambitious program and one that California would be
4 proud to consider as an alternative to our own program,
5 although we would always retain the right to enforce our
6 own standards. And we do have a slightly different way of
7 doing this.
8 One important piece of what's different about
9 California and which is recognized not only by the
10 national government but by a number of our fellow states
11 is that we have a mandate for sales of zero emission
12 vehicles. As you all know, we are working hard to revamp
13 that program so that it looks not only at conventional air
14 pollutants but also greenhouse gases and is more clearly
15 integrated into our low emission vehicle standards and our
16 existing Pavley program.
17 But we have been very, very pleased to be
18 included. We've been participants in all the technical
19 reviews that have been going on at the national level, all
20 the meetings with the auto companies, California has been
21 treated as a full partner with the federal agencies. And
22 we've developed as a result of this very good
23 relationships and frankly a lot of respect for the caliber
24 of the work that's going on on this effort.
25 As you have probably been reading in the papers 6
1 and there were a couple of stories in today's paper, we
2 are getting now to the point where the discussions that
3 been going on with the individual car companies are
4 getting to the point where we're hopeful that there will
5 be an agreement and there will be able to be an
6 announcement. And everybody is still very much at the
7 table.
8 But as often happens in a negotiations -- I think
9 any of you who have ever participated in any business or
10 labor negotiations can relate to this, before you get to
11 an agreement, things appear to be falling apart. And
12 there's lots of stories out there in the presents about
13 how things could be falling apart. And it's still true
14 they could fall apart. The fact is I believe there was --
15 well, I know there was an add campaign that was planned by
16 the Alliance which represents the larger companies and all
17 the domestic manufacturers. But they were planning to run
18 in the middle west, which was very negative and would
19 definitely have been inflaming public opinion against any
20 kind of increase in fuel economy standards, or that was
21 the intent. Those ads were pulled kind of at the last
22 minute. Some of them aired. They've been letters back
23 and forth coming from the Michigan delegation and threats
24 and counterthreats of all kinds floating around.
25 So I wanted to -- before we got into this much 7
1 more meaty part of our meeting -- to just kind of set a
2 little kind of a context here to say that we are still at
3 the table. We are still hopeful. And I guess by nature
4 being Californians we are optimistic because we think the
5 science is on our side. The science is on our side, but
6 also economics is on our side. We can see and we've
7 established that the companies can meet very ambitious
8 standards over the period out to 2025. There's just no
9 question that the technology exists, that it's available,
10 that it can be introduced.
11 There are costs. And we understand the different
12 companies are in different positions in terms of how they
13 can do. The biggest area of contention at this point
14 really is with the companies that are reliant on trucks,
15 light trucks that are included in this same category of
16 standards as passenger cars. And admittedly, the heavier
17 trucks -- although we're not including any of the real
18 over-the-road trucks that are not included in this
19 category -- but pickup trucks, lighter pickup trucks are
20 included in this category. And those companies that make
21 gasoline pickup trucks are more challenged in terms of how
22 they can meet a really tough standard. They are allowed
23 under these programs to do it with credits. They can
24 trade credits within the company from the lighter to the
25 heavier vehicles or they're allowed to pay penalties under 8
1 the NTSA program or to trade credits under our program.
2 So there are very -- and they're allowed the bank and
3 borrow. And there's all kinds of provisions for
4 flexibility. And the proposals that we've been looking at
5 are designed to include even more potential areas of
6 flexibility.
7 But the bottom line is that, you know, we
8 recognize that we need to move forward. And so it's just
9 going to continue -- it's going to continue until it's
10 over I guess is the best way to put it. But the time line
11 that we're on is that the President has committed to put
12 out a proposed rulemaking by the end of September. And
13 we're on the same time track to do that. We plan to do
14 the same thing.
15 At this point, I would say that we're not only
16 hopeful, but we are reasonably -- how should I say
17 reasonably confident that we will be able to be in
18 coordination with the Administration. We'll do our
19 rulemaking, but we think we'll be able to match up so the
20 federal cars and State cars can be -- both could be
21 allowed in California.
22 But we're not 100 percent certain of that. And
23 the fact that California does have the ability to set its
24 own standards and that we have done so much, particularly
25 in this area of providing incentives for advanced 9
1 technology vehicles, is what gives us a seat at the table.
2 I mean, the fact that we are a big market and that all the
3 companies have design centers here is also a part of it.
4 But that's also related to the fact that we, Californians,
5 have really put our money where our mouths are when it
6 comes to trying to create a successful market for the kind
7 of vehicles that everybody knows are going to need to have
8 in the future, but not everybody actually is going to see
9 for quite a long time. We get to actually see some of
10 these wonderful cars out there on the roads in a much
11 faster time frame. And we need that, because we have also
12 bigger emissions problems, bigger air quality problems,
13 are more dependent on gasoline and so forth.
14 So I just wanted to kind of tie it back to what
15 we're doing here this morning, because, you know, it's not
16 just something that's nice that we get to spend some money
17 to help bring some more advanced vehicles here. It's part
18 of a bigger and really I think internationally important
19 effort that we're engaged in here. And I hope you all
20 feel as proud as I do about the fact that we're able to do
21 this.
22 Before we actually get into the staff
23 presentation, Tom, if you have anything to add in terms of
24 the talks that we're having right now, I'd appreciate it.
25 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: No. I 10
1 think that covers it very, very well.
2 CHAIRPERSON NICHOLS: Well, all right. Okay
3 then. Mr. Goldstene.
4 EXECUTIVE OFFICER GOLDSTENE: Thank you, Chairman
5 Nichols.
6 AB 118 was signed into law in 2007 and created
7 AQIP which provides ARB about 30 to $40 million annually
8 through 2015 to invest in clean vehicle and equipment
9 projects to reduce criteria pollutants and air toxics
10 often with concurrent greenhouse gas benefits. 118
11 expands our portfolio of air quality incentives, providing
12 the opportunity to fund projects not covered under our
13 other incentive programs, such as the Carl Moyer Program,
14 Goods Movement, and Low Emission School Bus Programs.
15 These focus on near-term emission reductions from fully
16 commercialized technologies.
17 AQIP funds are unique in providing ARB with an
18 ongoing funding source to pay for technology-advancing
19 projects. In the program's first two years, we use these
20 funds to help accelerate the introduction of the advanced
21 motor vehicle technologies just coming to market, such as
22 hybrid trucks and buses and zero emission passengers cars.
23 We're counting on widespread use of these technologies to
24 help meet our post 2020 SIP emission reduction targets and
25 2050 climate change goals. AQIP investments are an 11
1 important early step in a fundamental transformation of a
2 California vehicle fleet necessary to meet these goals.
3 This year's funding plan continues hybrid truck
4 and ZEV incentives, as well as advanced technology
5 demonstration project funding. These projects are working
6 as we envisioned with strong demand and their streamline
7 design makes them easily accessible for consumers. The
8 funding plans also makes it easy for consumers to adjust
9 funding targets if revenues are lower than the amount
10 appropriated in the State budget. This is a situation we
11 experienced unfortunately in the last two funding cycles.
12 Andy Panson of the Innovative Strategies Branch
13 will present the proposal.
14 (Thereupon an overhead presentation was
15 presented as follows.)
16 MR. PANSON: Thank you, Mr. Goldstene.
17 Good morning, Chairman Nichols and members of the
18 Board.
19 --o0o--
20 MR. PANSON: Today, I will present our proposed
21 funding plan for spending the Air Quality Improvement
22 Program, or AQIP, funds appropriated to ARB in the
23 recently signed State budget. We are pleased with how
24 this incentive program is working through the first two
25 funding cycles and we are excited to build on that 12
1 momentum as we embark on our third year.
2 You will see over the course of my presentation
3 that we are recommending continued funding for our largest
4 and most popular project categories with refinements aimed
5 at making our limited funding go further. Otherwise,
6 there are no significant changes from past years.
7 --o0o--
8 MR. PANSON: First for some background. Through
9 the AQIP, ARB receives between 30 and $40 million annually
10 depending on revenues to fund clean vehicle and equipment
11 projects which reduce criteria pollutants and toxics and
12 also provide climate change benefits.
13 As Mr. Goldstene noted, the AQIP expands ARB's
14 portfolio of air quality incentives and provides the
15 opportunity to fund projects not covered through programs
16 such as the Moyer program or the Goods Movement Bond,
17 which focus on near-term reductions from fully
18 commercialized technologies.
19 AQIP has a different focus as ARB's only
20 incentive program that allows for the investment in mobile
21 source technology advancing projects critical to meeting
22 California's post-2020 air quality and climate change
23 goals.
24 AQIP investments today support the deployment of
25 hybrid trucks, zero-emission passenger cars, and other 13
1 advanced technologies that will help us meet our long-term
2 SIP strategies.
3 --o0o--
4 MR. PANSON: Looking further into the future,
5 reaching the 2050 greenhouse gas emission reduction goal
6 will require a fundamental transformation of the vehicle
7 fleet, with zero emission and hybrid vehicles making up
8 the vast majority of the fleet, as you heard during last
9 month's hydrogen fuel cell showcase.
10 AQIP investments are an important early step in
11 this transformation. We must start placing these advanced
12 vehicles on our roadways today in order to achieve
13 large-scale reductions in future decades.
14 Accordingly, we believe the Board-approved
15 guiding principles from our previous two funding plans
16 focusing AQIP on these longer-term goals continue to be
17 appropriate.
18 --o0o--
19 MR. PANSON: AQIP projects provide both immediate
20 emission reductions from the vehicles directly funded but
21 more importantly set the stage for greater reductions in
22 the future associated with large-scale deployment of
23 advanced technologies.
24 AQIP funds help reduce production costs through
25 increased sales and production volumes, raise consumer 14
1 awareness and acceptance so cleaner technologies become
2 mainstream choices, and accelerate technology transfer of
3 zero emission and hybrid technologies to new sectors.
4 --o0o--
5 MR. PANSON: With that broad background, I'll now
6 provide an update on the projects we funded through our
7 first two funding cycles. In each of these years, we
8 developed a funding plan based on the approximately $40
9 million appropriated in the State budget. Unfortunately,
10 as Mr. Goldstene noted, revenues into the AQIP fund have
11 been lower, coming in under $30 million in both years. As
12 a result, we've had to scale back project funding
13 following the contingency provisions that we established
14 in each plan.
15 We funded five project categories in our first
16 year, the two largest being vouchers for the purchase of
17 hybrid trucks and buses, and rebates for zero emission
18 passenger cars. We envisioned these as multi-year
19 projects. And as such, we continue funding the same
20 categories in the second year with one additional new
21 category, a pilot project for off-road hybrid equipment.
22 While at different points in implementation,
23 these projects are working as we envisioned and have
24 proven popular. You may have seen recent newspaper
25 articles reporting on the strong demand for ZEV rebates 15
1 through our Clean Vehicle Rebate Project, or CVRP. Due to
2 its popularity, we ran out of funding a month ago and we
3 have a lot of ZEV customers eagerly awaiting today's Board
4 action.
5 Our hybrid truck and bus voucher incentive
6 project or HVIP, has also been popular, getting California
7 fleets into hybrid trucks for the first time. This
8 program is acting as a strong catalyst to help the hybrid
9 truck market become self sustaining.
10 As this slide notes, the California Energy
11 Commission has directed $6 million of its AB 118 funding
12 to these two projects to help us meet consumer demand.
13 --o0o--
14 MR. PANSON: For a little more background on our
15 coordination with the Energy Commission, they receive
16 about $100 million annually under AB 118 for clean fuel
17 and vehicle projects to help meet California's climate
18 change goals.
19 There's overlap between the vehicle projects that
20 can be funded in each program, so we coordinate closely to
21 make sure our respective investments complement one
22 another.
23 I already mentioned that the Energy Commission
24 has stepped in to augment our clean vehicle rebate
25 projects. And at last month's hydrogen fuel cell 16
1 showcase, Commissioner Jim Boyd updated you on the
2 important investments the Commission is making on the
3 fueling infrastructure side. These are critical in
4 ensuring a successful California ZEV roll-out and another
5 example of our partnership on AB 118.
6 The Energy Commission has also taken the lead on
7 investing in workforce training to support the
8 technologies funded through both our programs.
9 --o0o--
10 MR. PANSON: With that overview, let's move on
11 the our proposed plan for the upcoming year.
12 --o0o--
13 MR. PANSON: I'll start by highlighting our
14 priorities for the year. The AQIP is working as we
15 envisioned, so we plan to continue directing most of this
16 year's funds to our two largest categories: Incentives
17 for the purchase of hybrid trucks and zero emission
18 vehicles.
19 Both hybrid truck and electric vehicle
20 technologies are at a key points where public incentives
21 can help them become mainstream choices, and there's been
22 strong demand for funding. We also propose to continue an
23 allocation for advanced technology demonstration projects.
24 These are an important part of the program because
25 successful demonstration projects can lead to new 17
1 deployment opportunities in the future. AQIP is ARB's
2 only ongoing funding source for these types of projects.
3 --o0o--
4 MR. PANSON: This slide shows our proposed
5 funding allocations for these categories, along with the
6 estimated number of vehicles that the funding levels
7 support. Note that the table shows two separate funding
8 targets. The $40 million target on the right reflects the
9 appropriation for AQIP projects in the State budget.
10 However, we are again projecting that revenues will be
11 lower than this full appropriation. We are incorporating
12 contingency provisions to address this revenue
13 uncertainty, and we will most likely be implementing a
14 smaller program.
15 The $28 million target on the left is a
16 conservative estimate of the total funding we expect based
17 on the revenues we've seen in the last two years. We will
18 initially issue solicitations for this lower funding
19 target, but will include provisions in all of our grant
20 agreements that allow us to scale up grant awards to fund
21 more vehicles if revenues allow.
22 Next, I'll describe each of these project
23 categories in a bit more detail.
24 --o0o--
25 MR. PANSON: The CVRP is designed to accelerate 18
1 the widespread commercialization of light-duty zero
2 emission vehicles and plug-in hybrid electric vehicles by
3 providing consumer incentives to partially offset their
4 higher costs. We've partnered with the California Center
5 for Sustainable Energy selected via competitive
6 solicitation in each of the last two funding cycles to
7 implement the CVRP.
8 --o0o--
9 MR. PANSON: ZEVs are the gold standard for ARB's
10 motor vehicle control program and early consumer
11 acceptance stimulated in part by the AQIP is a key to the
12 ultimate success of the ZEV program. This funding helps
13 enable technology-forcing regulations such as the advanced
14 clean car rulemaking, which you will consider later this
15 year. Last month's fuel cell showcase and the recent
16 popularity of the Nissan Leaf show that ZEV technology is
17 here and ready for deployment.
18 --o0o--
19 MR. PANSON: This slide illustrates the growing
20 demand for rebates we've seen since the start of CVRP.
21 The big jump corresponds to the launch of the Nissan Leaf.
22 Prior to that point, we mainly funded small numbers of
23 neighborhood electric vehicles, zero emission motorcycles,
24 and the commercial electric trucks. The truck incentives
25 moved over to the HVIP this past January. This growth 19
1 will continue as more models come to market.
2 The CVRP is open to plug in hybrid electric
3 vehicles and we anticipate the plug-in models will be
4 added in the upcoming funding cycle which will further
5 increase demand.
6 --o0o--
7 MR. PANSON: Our main challenge for the new
8 funding cycle is balancing this growing consumer demand
9 with our funding limitations. To address this, we're
10 proposing two changes that would allow us to greatly
11 increase the number of vehicles we could fund.
12 First, we propose tripling our funding allocation
13 from $5 million last year up to $15 million.
14 Second, we propose cutting ARB rebate amounts in
15 half. With the new rebate amounts, a full functioning ZEV
16 would qualify for a $2500 ARB rebate. This combines with
17 the $7500 federal tax credit to provide a total consumer
18 incentive of $10,000. We believe this level will still
19 provide a strong motivating incentive for consumers.
20 These two changes would allow us to fund about
21 six times as many vehicles, or almost 6,000
22 full-functioning ZEVs. We hope this carries us through
23 most of the next funding cycle, but it is hard to fully
24 project auto makers' vehicle deployment schedules and
25 consumer demand. If demand reaches our optimistic 20
1 assessments, our rebates would not make it through the
2 full funding cycle.
3 We also plan to set aside 10 percent of the funds
4 for use by dedicated car share fleets. Car shares offer a
5 unique opportunity to give large numbers of Californians
6 experience drives ZEVs.
7 --o0o--
8 MR. PANSON: Most of the comments we've received
9 on the funding plan relate to the CVRP, so I'll summarize
10 them here rather than at the end of the presentation.
11 These comments generally support the plan, but
12 some suggest targeted changes to our proposal as you will
13 hear during public testimony. The suggestions are
14 highlighted on this slide. Some have suggested retaining
15 the existing rebate levels either across the board or
16 specifically for car shares. This would mean funding
17 fewer vehicles overall.
18 Others suggest a set-aside or premium rebates for
19 California-based manufacturers. We believe there are
20 better ways through AB 118 to support California
21 manufacturing, such as the $55 million that the Energy
22 Commission is investing in in-state manufacturing
23 facilities and workforce training. We do not recommend
24 incorporating these changes at this time, as these
25 carve-outs would upset the balance we've tried to achieve 21
1 between consumer demand and our funding limitations.
2 One issue we are still working through relates to
3 a recently introduced light-duty zero emission commercial
4 delivery vehicle, currently eligible in the CVRP. The
5 CVRP is generally designed to incentive light-duty
6 passenger cars, while the HVIP handles heavy-duty
7 commercial vehicles. This has worked well to date,
8 however, a light-duty commercial van falls in between
9 those programs. And staff believes shifting this vehicle
10 class from the CVRP to the HVIP would allow for a more
11 appropriate incentive level and more streamlined
12 implementation.
13 We ask the Board to delegate to the Executive
14 Officer the authority to work through this one last issue
15 and make the appropriate changes.
16 --o0o--
17 MR. PANSON: Looking beyond this year, we will
18 not be able to meet consumer demand at these incentive
19 levels when annual vehicles sales ramp up to the ten of
20 thousands. AQIP is simply not a large enough program. So
21 this will likely be the last year we try to fully match
22 available rebates to consumer demand.
23 We are, of course, fully committed to supporting
24 ZEV deployment in California, but a more targeted approach
25 or other strategies will likely be required for the CVRP 22
1 in future years. It is too early to say exactly what
2 these new approaches will be. That will be our main
3 challenge in developing next year's funding plan.
4 --o0o--
5 MR. PANSON: Let's move on to our hybrid truck
6 voucher project, the HVIP. Hybrid trucks and buses are
7 available in multiple sizes and configurations. Over 50
8 hybrid truck and zero-emission truck models are available
9 from over 13 manufacturers. It's a diverse marketplace,
10 however, the higher cost relative to non-hybrid models has
11 been a deterrent to purchase. The HVIP provides vouchers
12 for California fleets to buy down the cost of hybrid or
13 zero-emission vehicles at the dealership when placing an
14 order.
15 We've partnered with CalSTART selected via
16 competitive solicitation in each of the last two funding
17 cycles to implement the HVIP. The project's streamlined
18 approach has proven popular with California fleets,
19 vehicle dealers, and manufacturers. The HVIP is working
20 well, so we plan to continue this successful project
21 design with refinements aimed at encouraging broader
22 participation and ensuring that the reduced project
23 funding relative to past years goes further.
24 --o0o--
25 MR. PANSON: Hybrid technology has a high 23
1 potential to be self-sustaining as it gets more
2 established in the marketplace. So we envision it as a
3 key part of our long-term clean air strategy. And we see
4 advanced hybrid trucks playing an important role in our
5 vision for a more efficient lower emitting freight
6 transportation system.
7 --o0o--
8 MR. PANSON: This slide helps illustrate our
9 vision for HVIP in helping hybrid technology become
10 self-sustaining. Hybrid trucks generally cost between 30
11 to $70,000 more than non-hybrids, in part because they're
12 still produced in small volumes. By spurring the market
13 in this early stage, our investments will help drive down
14 the cost of future hybrid trucks, accelerating consumer
15 acceptance, and stimulating investments in the next
16 generation of hybrid technology.
17 When drive train production volumes increase,
18 prices should decline to the point where hybrids are
19 economical without an incentive because their higher fuel
20 economy reduces their pay back period to a more reasonable
21 time, as shown on the right-hand axis of this graph.
22 --o0o--
23 MR. PANSON: We've funded about 900 vehicles to
24 date. The majority are urban delivery trucks with
25 vouchers averaging about $28,000 per vehicle. Electric 24
1 trucks are also a part of the program, and about 170 of
2 the vouchers have gone to zero-emission trucks.
3 --o0o--
4 MR. PANSON: As I noted a moment ago, we are
5 proposing only modest refinements to the HVIP. We intend
6 to leave the base voucher amounts unchanged, but would
7 provide an extra $10,000 voucher for the first three
8 vehicles a fleet purchases each year to encourage
9 additional California fleets to take advantage of the
10 program.
11 We also proposing to increase voucher amounts for
12 hybrid school buses to encourage public school districts
13 to participate. To balance these increases and enable us
14 to reach our funding target of 500 new vehicles, we
15 propose a declining voucher scale for larger purchases.
16 --o0o--
17 MR. PANSON: Now on to the advanced technology
18 demonstration projects. We're proposing $2 million in
19 funding for this category, which matches the allocation in
20 each of the past two funding cycles. Our goal is to help
21 accelerate the next generation of advanced emission
22 reduction technologies with a focus on those within three
23 years of commercialization.
24 We are already have ten projects in progress
25 demonstrating advanced emission controls on locomotives, 25
1 marine engines, and commercial lawn and garden equipment.
2 We will start seeing results for these projects over the
3 next year and we will evaluate their success to make
4 future funding decisions.
5 Priorities for the new funding cycle include a
6 school bus demonstration project that was deferred from
7 last year and additional locomotive projects which match
8 the priorities set in ARB's 2009 locomotive technical
9 assessment report.
10 To complement the HVIP, we are proposing to fund
11 hybrid truck testing through the US Department of Energy's
12 National Renewable Energy Laboratory. This testing will
13 help better characterize duty cycles and emissions for the
14 various vocations where hybrids are most often used.
15 --o0o--
16 MR. PANSON: You may be wondering about the other
17 categories we funded in past years, so let me briefly
18 mention our plans for these before concluding.
19 Lawn and garden equipment replacement has shifted
20 to the Moyer program, so we are not proposing future AQIP
21 funding.
22 The agricultural work vehicle project is still
23 ongoing. The funds we've already allocated in previous
24 years are expected to meet demand, so we are not proposing
25 additional funding. 26
1 We are just starting our off-road hybrid
2 equipment pilot project, which is intended to encourage
3 the deployment of hybrid construction equipment in
4 California. We just selected a grantee last month, and we
5 used data from this pilot project to evaluate future
6 funding for this type of equipment. If the pilot proves
7 successful, we'd likely be back before you with a proposal
8 for a more comprehensive voucher project in future funding
9 plans.
10 We see transferring hybrid technology to the
11 off-road sector as a natural revolution for the AQIP.
12 You may remember that the Legislature directed
13 2008 AQIP funds to start a loan guarantee program to help
14 truckers impacted by the fleet rules. The loan program is
15 proceeding with financing provided for over a thousand
16 trucks and retrofits. We are adding a new direct loan
17 element this year, and we expect to see an increase in
18 loans over the next few months as the first compliance
19 dates of the rule approach.
20 --o0o--
21 MR. PANSON: To conclude, the proposed funding
22 plan builds on AQIP's successes providing continuing
23 funding sources for existing categories. This funding
24 will help zero-emission and hybrid vehicles proceed to the
25 critical juncture of becoming self-sustaining. These 27
1 advanced technologies are key to reaching our long-term
2 air quality and climate change goals. It is critical to
3 invest now because of the long time frames needed for
4 significant fleet turnover.
5 Because we are seeing strong demand and have
6 limited funding, we've had to make difficult choices
7 regarding allocations and incentive levels for each
8 category. We believe our proposal strikes the right
9 balance.
10 We recommend the Board approve the proposed
11 funding plan with the one minor revision I mentioned
12 earlier and direct staff to start releasing grants
13 solicitations to we can keep this important incentive
14 funding flowing to consumers.
15 Thank you.
16 CHAIRPERSON NICHOLS: Thank you.
17 Obviously when there's not much money, there's
18 always going to be difficulties about how to spread it.
19 Clearly, you've come up with a strong rationale for the
20 proposals that you're making.
21 Before we hear from the audience, I wonder if any
22 of the Board members have any particular questions.
23 Dee Dee.
24 BOARD MEMBER D'ADAMO: Not a question as much as
25 want to put something out there for discussion. 28
1 Yesterday, I will my staff briefing. And I've
2 always been very supportive of this program, that it sort
3 of dawned on me yesterday that maybe one region of the
4 state is being left behind with respect to participation
5 rates.
6 And I don't have the staff report, but I believe
7 there's some information contained in the staff report as
8 to where the participation rates are with the whole state.
9 And sort of what I'd like to do is have staff
10 refer to those rates and honing in on the valley.
11 MR. PANSON: Yes, I can do that. And actually,
12 there are numbers in the staff report, but the numbers
13 keep changing. The numbers I give you won't quite match
14 the staff report, because we have funded more vehicles
15 since then.
16 But for the CVRP, the majority of funds have gone
17 to our largest urban areas. About 40 percent of the
18 rebates have gone to the Bay Area, about 30 percent to the
19 South Coast, and about 20 percent in San Diego. And the
20 participation in the valley has been pretty low, at just
21 about two percent of the rebates.
22 CHAIRPERSON NICHOLS: So that would be ten based
23 on my arithmetic here. They'd be ten percent based on the
24 numbers you just gave.
25 MR. PANSON: Well, the Bay Area has seen about 40 29
1 percent; South Coast about 30 percent; 20 percent in San
2 Diego. And then in the San Joaquin Valley itself, it's
3 been pretty low, at about two percent, with the other 8
4 percent spread in the Sacramento region and other areas.
5 So it has been very low on the CVRP side.
6 There are a number of challenges, particularly in
7 getting the ZEVs into the valley.
8 Let me also just give you the statistics for the
9 HVIP, the heavy-duty truck side of things, because I think
10 things have been a little more balanced in that arena.
11 And we've seen about 50 percent of the truck vouchers go
12 to the South Coast, about just under 30 percent to the Bay
13 Area, about 10 percent to the San Joaquin Valley, and
14 about 10 percent to the other main urban areas, Sacramento
15 and San Diego.
16 BOARD MEMBER D'ADAMO: So -- and you're
17 absolutely correct. There are a number of challenges with
18 the valley. It's a large area. There's very limited
19 infrastructure. I've always supported public
20 infrastructure with using sort of a cluster approach,
21 because I think it's the best way to service the consumers
22 that have these vehicles so they have a good experience.
23 And if the vehicles are in urban areas and it makes sense
24 to have most of the public infrastructure there, but then
25 it works against what we're trying to do in the valley. 30
1 So I know that this program has a number of
2 goals, technology forcing, et cetera. And the Valley
3 isn't necessarily needed for that. But with respect to
4 increasing consumer acceptance and meeting our climate
5 change goals and air quality goals, we do need to deploy
6 these technologies in the valley.
7 So I just wanted to kind of cue it up. I don't
8 necessarily have an answer with respect to today's
9 allocation. I think staff has worked hard on this, and I
10 don't want to upset the apple cart.
11 The other thing, too, is that I don't want to
12 start a process like we had with 1B, where we had one
13 region competing against another and it turning into a
14 political debate about how the pie gets sliced up.
15 But I do think we need to be looking at this.
16 Maybe if staff could be directed when they come back for
17 next year how some program changes could be made with
18 respect to this program or incorporating some of the other
19 programs that exist, figuring out a way to get more of
20 these technologies in the Valley. Because as I'm out and
21 about, we are way behind.
22 The other thing, I know there's going to be some
23 testify about the Car Share Program. Perhaps targeting
24 something like a Car Share Program in the valley, you
25 know, based on extreme non-attainment or even South Coast. 31
1 It looks like South Coast already participates in a very
2 high rate.
3 That's about the only suggestion I have. But not
4 necessarily making any changes for today, but in general
5 to start the discussion for the next round.
6 CHAIRPERSON NICHOLS: Well, I appreciate your
7 doing it in that spirit because you're right. It's no fun
8 for any of us to get caught in the middle of a regional
9 fight within the state. And if we can avoid that, I think
10 we'd like to.
11 But I think your point about looking at this from
12 a perspective of how do we make sure that in total this
13 program is benefiting, the State is really a very smart
14 one. And we should look at it not just in terms of is
15 everybody getting to participate in having plug-in
16 vehicles or any particulate type of vehicle, but how do we
17 make sure we get a balance between pushing the technology
18 and also pushing the things that are going to be the most
19 beneficial for air quality in the short run because there
20 is no question about need there.
21 BOARD MEMBER D'ADAMO: Right. And the one thing
22 I didn't mention, which of course everybody already knows,
23 the Valley suffers from some pretty challenging
24 demographics: Highest unemployment rates, highest
25 foreclosure rates. So even if we were to somehow target 32
1 the Valley, we have to deal with that issue as well, which
2 is why I brought up something -- creative programs like
3 ride share or partnerships with public entities. Some way
4 to get those cars out there so that valley residents could
5 experience them maybe in a more limited way without
6 necessarily having ownership.
7 CHAIRPERSON NICHOLS: Well, thanks for the
8 reminder. And you know, if you're able to devote some
9 thought about how we can best proceed along those lines,
10 that would be also terrific.
11 MR. PANSON: Can I interject quickly? We do --
12 we recognize this issue even before we briefed you. And
13 we have taken steps -- we're talking with the air district
14 and we're collectively putting our heads together to look
15 at steps that we can take to try and get more of these
16 vehicles into the valley. They have some local incentives
17 available on the vehicle side. We're looking for ways to
18 make sure it's very easy for consumers to marry those up.
19 We're also talking about doing more consumer
20 outreach and trying to help them secure funding for
21 consumer outreach. And they're interested in exploring
22 what they can do to provide additional infrastructure
23 funding. So I don't want to understate the difficulty of
24 the challenge, but we are taking steps in that arena.
25 Another thing that I think is also going to 33
1 naturally help is that when the plug-in hybrids come to
2 market, they may be a little better suited for the Valley,
3 where, you know, distances are more spread out and that.
4 So I think as when the plug-ins -- as they come to market
5 more fully, that also naturally is going to help. So we
6 hear the concern and we agree with you. And we're trying
7 to take steps to address it.
8 CHAIRPERSON NICHOLS: Thank you.
9 Let's go to the public then. We'll begin with
10 Chris Abarca and James Chen and Nicholas Cole.
11 MR. ABARCA: Thank you. I'm Chris Abarca with
12 Azure Dynamics. We're here to support the staff's
13 recommendation on the revision moving -- potentially
14 moving the forward transit connect electric to the HVIP
15 program out of the CVRP program. We really are focused on
16 the commercial market. We have a commercial cargo van
17 that is able to carry a thousand pounds. Really is well
18 suited for urban delivery. And we really appreciate the
19 staff taking the time to listen to our concern and really
20 acknowledge it. And we just wanted to be here in support
21 of that. And thank you for all of your hard work.
22 CHAIRPERSON NICHOLS: Thank you.
23 James Chen.
24 MR. CHEN: Good morning, Chairperson Nichols and
25 honorable members of the Board. My name is James Chen, 34
1 and I'm the Director of Policy and Associate General
2 Counsel for Regulatory Affairs for Tesla Motors.
3 On behalf of the company, I'm pleased to provide
4 this testimony in support of the AB 118 funding plan for
5 fiscal year 2011/2012.
6 As many of you know, Tesla is a California-based
7 manufacturer of electric vehicles and electric vehicle
8 power trains. As a California company, Tesla is very
9 proud of the catalytic affect it has on the automotive
10 industry in revitalizing interest in the EV technology in
11 the EV market. As a whole, electric vehicle technology
12 has enjoyed a resurgence, with more and more electric
13 vehicle models coming onto the market.
14 That said, success of this introduction should
15 not be confused with full market success. While we have
16 done well in introducing vehicles to members of the
17 consumer market, such as the innovators and early
18 adopters, we are now facing a critical juncture where we
19 move away from these early purchasers to the early
20 majority, the first signs of a mass market. Incentive
21 programs like CVRP are vitally important to bolstering and
22 supporting this market.
23 Certainly, Tesla understands the economic
24 challenges facing California, and we support the creative
25 measures put forth by ARB staff with regards to the 35
1 funding for these budgetary reasons.
2 That said, we also should not lose focus on the
3 other goal of AB 118. And that is supporting
4 incentivizing the growth of jobs in the clean tech sector.
5 Increasing deployment will directly impact the economy in
6 a positive manner. Accordingly, Tesla recommends
7 modification that would support higher incentives for
8 vehicles produced by California manufacturers. And when
9 we talk about production by California manufacturers,
10 we're referring to vehicles that are substantially or
11 wholly produced in the state of California.
12 We believe this will recognize the valuable
13 contributions California manufacturers have made in
14 growing jobs in the economy and growth of the economy.
15 Not only will this validate the strategies from
16 manufacturers like Tesla, but will allow us to continue to
17 catalyze the industry, and secondly, support continued job
18 growth in the state. Not only job growth directly by
19 Tesla, but growth by suppliers. With the vast majority of
20 automotive suppliers east of the Mississippi having these
21 incentives validate what we're doing as a California
22 manufacturer will help bolster and support bringing those
23 suppliers into the state. Our written comments provide
24 additional detail, and we thank the Board for the
25 opportunity to provide this input. 36
1 CHAIRPERSON NICHOLS: Thank you very much.
2 BOARD MEMBER SPERLING: Can I ask one question?
3 What are your production plans for 2012?
4 MR. CHEN: For 2012, we will be producing and
5 introducing our model S, an EV sedan capable of seating
6 five adults and two children. We are ramping up the
7 production volumes of 20,000 vehicles a year. For that
8 first year, we will be producing approximately 5,000
9 vehicles.
10 BOARD MEMBER SPERLING: When do you start sales?
11 MR. CHEN: Sales -- we're taking deposits right
12 now. But as far as delivery, delivery will be in mid
13 2012.
14 BOARD MEMBER SPERLING: Thank you.
15 CHAIRPERSON NICHOLS: Good news. Thank you.
16 MR. CHEN: Thank you.
17 CHAIRPERSON NICHOLS: Okay. Nicholas Cole, Matt
18 Sloustcher, and Jamie Hall.
19 MR. COLE: Good morning. My name is Nick Cole,
20 and I'm the CEO of Car2Go North America.
21 You should have in front of you a letter of
22 support we've received from the San Diego Delegation to
23 the California Legislature for your review.
24 I'd like to thank the Air Resources Board for
25 allowing me the opportunity to discuss the benefits of an 37
1 electric vehicle car sharing programs as it relates to the
2 Clean Vehicles Rebate Program. Car2Go is here today in
3 opposition to the proposed 2011 funding plan with regard
4 to the reduced CVRP rebate amount by 50 percent for all
5 eligible vehicles, regardless of how these vehicles will
6 be used.
7 It is our position that alternatively fueled car
8 sharing has the unique ability to provide individuals of
9 all income levels access to these vehicles and achieves
10 the stated goals of the program more effectively.
11 Therefore, we are requesting today that fiscal
12 year 2010/2011 rebate levels be continued for vehicles
13 purchased for use in a car sharing program. It is the
14 intention of Car2Go to launch the most innovative program
15 and environmentally friendly form of car sharing available
16 today. It was our plan to launch North America's very
17 first fully electric car sharing program here in
18 California. When considering various locations worldwide
19 to launch this program, the rebate available through the
20 Air Resources Board played a major role in leading us to
21 chose California.
22 The unexpected cut will have a considerably
23 negative impact on our business model, which already
24 requires a large up front investment of over $20 million.
25 Car sharing at its core has a positive impact on the 38
1 communities it serves, by reducing congestion, reducing
2 emissions, complimenting existing public transit by
3 alleviating last mile concerns and is a cost effective
4 alternative to vehicle ownership.
5 Car2Go's electric vehicle car sharing model
6 further enhances the core benefits of car sharing by
7 making electric vehicles accessible to target users that
8 cannot be directly reached through rebate programs and tax
9 incentives because they cannot afford to buy an electric
10 vehicle by addressing consumer range anxiety through the
11 use of the vehicles and of course increasing the electric
12 vehicle visibility and adoption through firsthand
13 experience of the technology with 300 electric vehicles
14 shared by thousands of individuals.
15 In conclusion, today, we would like to ask the
16 Air Resources Board to recognize the efforts taken to
17 encourage and accelerate zero emission vehicle deployment
18 and technology, as well as increasing electric vehicle
19 visibility and adoption in the state of California by
20 supporting the efforts of car sharing programs.
21 In light of the extraordinary initial investment
22 needed to make the electric vehicles available to all
23 residents of a community and the direct benefits of such a
24 program as it relates to the established goals of the
25 CVRP, we respectfully ask that the current levels of 39
1 funding be maintained for car sharing programs in the
2 upcoming fiscal year.
3 CHAIRPERSON NICHOLS: Thank you.
4 I'm going to ask some questions about that, but
5 at the end after we've heard from everybody. Appreciate
6 your comments.
7 Matt Sloustcher and then Jaime Hall and John
8 Clements.
9 MR. SLOUSTCHER: Thank you, Chairman Nichols and
10 members of the Board.
11 I'm Matt Sloustcher, the Government Relations
12 Manager at CODA Automotive. I'm here primarily to voice
13 my support for both the AQIP and the Clean Vehicle Rebate
14 Project with some slight modifications I'd like to
15 recommend. I'll start with just a bit of background.
16 CODA was founded three years ago. The idea was
17 relatively simple: To build a mass-market, long-range
18 relatively affordable electric vehicle. It's been a long
19 journey for the company, but I'm excited to report that
20 we're nearing the finish line and expect to have our first
21 vehicles on the road by the end of the year.
22 Along this journey over the past two years, we've
23 more than quadrupled our head count in California. By the
24 end of 2012, we expect to double our head count again.
25 We recently just secured a new headquarter 40
1 facility in the city of Los Angeles that will help us to
2 grow to about of 600 in the city of L.A. We also are
3 building sales center across the state and are supporting
4 jobs -- indirect jobs through supplier relationships with
5 engineering partners.
6 As mentioned previously, there are many other
7 companies in California who are on similar growth
8 trajectories.
9 My point is that with the global clean vehicle
10 movement underway, California stands a lot to gain both
11 today and in the future by cultivating this industry. In
12 addition to jobs, these companies are also sending tax
13 revenue to Sacramento.
14 The Clean Vehicle Rebate Project has no doubt
15 been effective at accelerating the adoption of electric
16 vehicles and other ZEVs in the state. But the Air Board
17 has an opportunity to make the program more effective to
18 provide co-benefits, to make it a more effective job
19 creator. And the way to do this, as mentioned previously,
20 is to create a set aside or to offer a premium rebate for
21 the purchase of vehicles from California suppliers.
22 I would just add that this is supported both by
23 AB 118 itself and in California precedent with other
24 programs like the self-generation incentive program that
25 have these sorts of preferences. 41
1 To close, I'd like to thank Chairman Nichols and
2 members of the Board and staff for your diligent efforts
3 on the program. We think it's been very effective and
4 very important for cultivating industry. Thank you.
5 CHAIRPERSON NICHOLS: Thank you.
6 BOARD MEMBER SPERLING: Chairman, could I ask a
7 question?
8 CHAIRPERSON NICHOLS: Yeah.
9 BOARD MEMBER SPERLING: We're going to talk about
10 this some more, I presume. But just as a factual thing, I
11 mean, most of us are very strongly supportive of CODA and
12 companies -- EV companies in California. But what percent
13 of the content of a CODA car is California?
14 MR. SLOUSTCHER: I don't have specific numbers
15 for California. In terms of --
16 BOARD MEMBER SPERLING: For U.S.
17 MR. SLOUSTCHER: It's 30 to 40 percent I believe.
18 BOARD MEMBER SPERLING: For U.S.?
19 MR. SLOUSTCHER: Correct. And the cars will be
20 final assembled in California.
21 BOARD MEMBER SPERLING: They're Chinese
22 batteries?
23 MR. SLOUSTCHER: Correct.
24 CHAIRPERSON NICHOLS: Thank you.
25 Jaime Hall from Calstart and John Clements and 42
1 Mark Geller.
2 MR. HALL: Good morning, Chairman Nichols and
3 members of the Board.
4 My name is Jaime Hall. I'm Policy Director for
5 Calstart.
6 I want to speak in favor of the AQIP plan overall
7 as proposed by staff. And I want to talk on HVIP in
8 particular, the hybrid truck and bus voucher incentive
9 project.
10 This program is really exactly what fleets and
11 manufacturers need in order to move the industry forward
12 and to get these vehicles on the road. It's streamlined
13 and simple, making it unlike many government programs. It
14 reduces costs right at the point of purchase, which is a
15 lot easier than the tax credit or something like that
16 where companies need to put up money up front and sort of
17 get repaid later.
18 And the Board and staff have signaled a
19 multi-year commitment to this. It's a stable program and
20 provides long-term signals the industry needs in order to
21 keep moving ahead in this area.
22 It's been very successful so far. The first year
23 sold out in record time. This is because of a lot of
24 pent-up demand. All the money went out quickly, and we
25 got 100 trucks on the road in a matter of months. 43
1 It was responsible for more than a third of the
2 national sales last year of hybrid trucks, which really
3 means this program is driving the market nationwide. It
4 won an award from ACEEE as a really innovative and
5 effective program for energy efficiency. We conducted a
6 study funded by the Energy Foundation that identified it
7 as one of the best incentive structures and something that
8 people would really like to see copied elsewhere in other
9 states and around the county.
10 We're starting to see interest in that. New York
11 is looking at maybe doing something along these lines and
12 we know some federal agencies have been speaking with
13 staff about how they could do something like this at the
14 federal level. This is exactly what industry would like
15 to see, what we would like to see, and it's really
16 evidence of the fact this is a good program.
17 It will continue to be important in the future.
18 The pace has slowed down a bit from last year because
19 there's not so much pent-up demand anymore, but we've been
20 polling companies and see strong and steady demand for
21 purchases throughout the next year or two. We are talking
22 to large fleets who are planning significant purchases in
23 the future. We're working with municipalities and next
24 level fleets in trying to get these things beyond the
25 early adopters. 44
1 And it's important to know there are no federal
2 incentives for this sector. HVIP is really the only game
3 in town. This is what's getting hybrid trucks on the
4 road. It's the most important program out there for
5 really advanced, medium, and heavy-duty vehicles.
6 We've been a key AB 118 supporter. We definitely
7 agree CARB has got a difficult job given budget
8 constraints and sort of all the demands to pull money in
9 different directions. We think you've struck the right
10 balance. It's a difficult job. We think these innovative
11 programs are really setting a clear market signal. And we
12 encourage you to keep the HVIP program around and think
13 you've done a great job making difficult choices here.
14 CHAIRPERSON NICHOLS: Thank you.
15 MR. HALL: I beat the buzzer.
16 CHAIRPERSON NICHOLS: You did. Okay.
17 John Clements and then Mark Geller and Jay
18 Friedland.
19 MR. CLEMENTS: Good morning, Madam Chair and
20 members of the Board. Thanks for the opportunity to share
21 today.
22 I'm an end user. I'm John Clements, Kings Canyon
23 Unified School District Transportation Director. I am
24 from the Central Valley.
25 And I'm here to tell you that this year we're 45
1 going to use HVIP funds in combination with lower emission
2 school bus funds, in combination with AB 939 funds, in
3 combination with our Measure C Fresno County
4 Transportation Authority road tax dollars to fully fund
5 two charge sustainable hybrid electric -- oh, I forgot.
6 And because I participated with Joe Calivita and Lucina's
7 working group for HVIP and there was a connection made, I
8 got a call from a lady over at Sac AQMD by the name of
9 Fria Eric that says, by the way, I have some hybrid moneys
10 that I need help spending. And so those two buses that I
11 will receive before Christmas will be fully funded, thanks
12 to the connections I've made here in this building.
13 Now, that's the first two. But we're going to go
14 with three more that we received about 635,000 through
15 CMAC in partnership with our local Fresno County Council
16 of Governments and Caltrans and Federal Highway
17 Administration that provides those dollars. But we've
18 come up a little short. And so those are going to be
19 delivered in 2012. Through the incentives that are
20 available for school bus in 2012, those three buses I'm
21 going to obtain, two more charge sustaining models and
22 we're going to go ahead and step out even though the
23 plug-in model through our manufacturer has not been
24 approved yet at this building because the manufacturer
25 hasn't gone through the approval process, we're going to 46
1 seek a plug-in charge depleting hybrid electric school bus
2 as our fifth one.
3 And I believe that when it's all said and done,
4 we'll probably have to come up with about 12- to 13,000 of
5 our own dollars, which is a small price to pay for well
6 over in excess of a million, million-and-a-half in school
7 buses.
8 CHAIRPERSON NICHOLS: That's a fabulous story.
9 MR. CLEMENTS: So thanks for those dollars. Keep
10 the dollars coming.
11 Our local paper did misquote Calstart, and I
12 believe the electronic version is correct. It said there
13 weren't any more dollars left for HVIP this year. We know
14 that's not correct. I'm counting on those dollars. I
15 have a copy for you. And I have a copy for our Valley
16 Board person that I'd like to leave with staff.
17 Also inside there are two pictures. One is of an
18 all-electric truck. We love Kings Canyon Unified and our
19 Central Valley Transportation Center, of which we are a
20 JPA member with our local city and our local community
21 college. We love to demonstrate this for food service
22 delivery throughout our local school district region, and
23 one of these, which is an all-electric school bus yet to
24 come. Thank you.
25 CHAIRPERSON NICHOLS: Well, I'm thrilled to hear 47
1 that you've been able to piece all these different bits of
2 money together. It's an awesome task to just ferret out
3 all those funds.
4 MR. CLEMENTS: I can stand here and tell you
5 more. We're going to get seven diesel school buses with a
6 number of other funds, including your lower emission
7 school bus funds. So next year, we're going to get twelve
8 new school buses, you know. And of course, we still have
9 17 that we need to get rid of to meet that 2018 deadline.
10 We're plugging away. And thank you for those funds. Keep
11 them coming.
12 CHAIRPERSON NICHOLS: I'm sure the kids who
13 breathe cleaner air in those buses are also --
14 MR. CLEMENTS: I'm excited. We hope to plug that
15 one hybrid into solar-covered carports during the day.
16 CHAIRPERSON NICHOLS: Great. Thank you.
17 Mark Geller.
18 MR. GELLER: Hello. Mark Geller from Plug-In
19 America.
20 I'm very pleased to be here to support the staff
21 recommendation on CRVP, the use of the 118 funds. It's
22 very clear that commercialization of zero emission
23 vehicles, particularly passenger vehicles, is going to be
24 critical to achieving the goals the State has set out.
25 Consumers are the linchpin. Thousands of cars are now -- 48
1 plug-in cars are now being delivered to consumers in
2 California.
3 We support the lowering of the rebate level in
4 order to reach more consumers in order to enable more
5 folks to get vehicles. It's not a surprise to Plug-In
6 America that plug-in cars have the kind of demand we're
7 seeing in the marketplace.
8 It's clear from the presentation earlier that the
9 demand this past funding year outstripped the supply of
10 vehicles. And it is close to anticipated that that will
11 be the case again next year.
12 We hope that the Board through 118 funding and
13 other measures finds ways to continue to support
14 consumers' attempts to get plug-in vehicles in California.
15 The benefit of plug-in vehicles in terms of air
16 quality and petroleum reduction is perhaps unsurpassed by
17 any other effort of this Board. And we hope they will
18 continue. You will continue to make all the efforts to
19 make sure consumers are able to get plug-in vehicles in
20 California with the support of the State and the federal
21 government.
22 Thank you very much.
23 CHAIRPERSON NICHOLS: Thank you.
24 Jay Friedland, followed by Mel Assagai and
25 Michael Bennett. 49
1 MR. FRIEDLAND: Good morning, Chairman Nichols
2 and Board of the members. I'm actually here in a slightly
3 different role than usual. My colleague, Mark Geller,
4 spoke for Plug-In America. I'm here speaking on behalf of
5 Zero Motorcycles, which I'm the BPA of strategy and
6 sustainability.
7 I really want to take an opportunity to thank the
8 Board and the staff for all the hard work they've done on
9 the Clean Vehicle Rebate Program. It's a really
10 outstanding and successful program.
11 For a small company like Zero, the consumer
12 incentives help both consumers and manufacturers. And I
13 think that's one of the things that we really want to get
14 across in that it's very highly leveraged. The consumers
15 that benefit and the manufacturers benefit.
16 The Zero sales team estimates there was probably
17 between a 30 to 50 percent increase in sales in California
18 based on the fact that the rebate was available for our
19 zero emission motorcycle. And to give you a feeling, it's
20 a $10,000 motorcycle. There is a $1,000 federal tax
21 credit, and there was the $1500. So put it at 7500, which
22 was very significant from a consumer standpoint.
23 At several of the other manufacturers have
24 mentioned, one of the key goals written into AB 118 was to
25 encourage California manufacturing of EVs and have EV 50
1 components and really to enhance the California's green
2 economy and green jobs in California. So Zero is joining
3 together today with Tesla and CODA and Vantage and other
4 California manufacturers to request your consideration of
5 the proposal, which has two components to it. One is an
6 enhanced rebate level for California manufacturers. And
7 secondly, set-asides similar to the car share set-aside
8 for plug-ins that are manufactured in California.
9 To give you a feeling, Zero has grown from five
10 employees in 2008 to now 60 employees today. This is in
11 California. Last year, we moved our manufacturing. We
12 originally started out manufacturing in Asia, and we moved
13 our manufacturing back to the U.S., back to Scotts Valley
14 and Santa Cruz. And we want to grow this further.
15 To answer Dr. Sperling's question in advance, we
16 have over 50 percent U.S. content and have qualified for
17 export funding under the U.S. export/inport bank as well.
18 So we really would like to look at the original goals of
19 AB 118 and the envisioned ideas and look at preferences
20 that will further help the California economy and
21 manufacturers in that space.
22 CHAIRPERSON NICHOLS: Thanks.
23 Mel Assagai followed by Michael Bennett and then
24 bone Bonnie Holmes-Gen.
25 MR. ASSAGAI: Good morning, Madam Chair and 51
1 members. How are you this morning?
2 I'm Mel Assagai for Navistar. As you know,
3 Navistar has been partners with the Air Resources Board in
4 the climate change efforts from the very start. We
5 manufacture hybrid electric school bus. We manufacture
6 hybrid trucks. Even have an all-electric vehicle that's
7 for sale in California, all ARB certified.
8 We want to thank the staff for this excellent
9 recommendation. We know this is a very challenging fiscal
10 time and there are hard choices to be made. We're glad
11 the Board is sticking with its commitment to the AQIP and
12 the HVIP. We think the HVIP is a very sensible program.
13 The voucher program is a very superior way of getting
14 these vehicles to market.
15 We want you to stay the course and understand
16 that the last year or so won't be typical of what's going
17 on in the future. We expect demand for these vehicles to
18 increase. We're planning on it and we hope that we can
19 continue to support you in your efforts. Thank you very
20 much.
21 CHAIRPERSON NICHOLS: Thank you.
22 Mr. Bennett.
23 BOARD MEMBER SPERLING: Could I ask a question?
24 CHAIRPERSON NICHOLS: Sorry.
25 BOARD MEMBER SPERLING: So this is wonderful that 52
1 Navistar has been interested in hybrid vehicles. Can you
2 give us a better -- given that Navistar is one of the
3 largest truck manufacturers, can you give us a sense of
4 how important or what hybrid vehicles are, some sense
5 of -- I guess my real question is: How much impact is our
6 program really having in terms of simulating investment on
7 your part?
8 MR. ASSAGAI: Your programming really is at the
9 heart of innovation in this area. We recognize that
10 California leads the way in this area. So a lot of the
11 innovation that we've engaged in over the years has been
12 driven by the ARB's priorities and what it set out in
13 terms of incentivizing these things. It really is maybe
14 the most important element in driving innovation at
15 Navistar. We look at California as a proving ground, as a
16 starting place, and someplace we expect the market to
17 grow. It's very, very important. And that's why we're
18 here to support the program today.
19 BOARD MEMBER SPERLING: Thank you.
20 MR. ASSAGAI: You're very welcome.
21 CHAIRPERSON NICHOLS: Thank you very much. I
22 understand that Mr. Bennett did not attend today. I guess
23 he signed up online and then decided not to. So Bonnie
24 Holmes-Gen.
25 MS. HOLMES-GEN: Good morning, Chair Nichols and 53
1 Board members. Bonnie Holmes-Gen with the American Lung
2 Association of California.
3 And I wanted to tell you again that the American
4 Lung Association of California strongly supports the AB
5 118 program and believes this funding, ARB AQIP together
6 with the 188 funding is an extremely important component
7 of California's efforts to jump start the market for the
8 cleanest and lowest carbon transportation technologies.
9 And we're very pleased with the growing list of
10 accomplishments of this program. And I've been really
11 pleased to be participating with the CEC 118 Money
12 Advisory Committee also and seeing both sides of this. We
13 hope that you can find more ways to publicize the
14 accomplishments and get the word out there.
15 I did want to highlight that we agree with the
16 point raised by Board Member D'Adamo and discussing
17 earlier and just comment that the history of this
18 particular pot of funding has been both to promote
19 advanced technology and to assist the air districts with
20 their attainment challenges, especially in these tough
21 areas. This funding can greatly assist in meeting federal
22 air quality standards.
23 And we certainly would support more focus and
24 discussion on how we can get more dollars and assistance
25 from this program and some of the worst polluted areas, of 54
1 course, the San Joaquin Valley and looking for ways that
2 we can increase consumer experience with zero emission
3 vehicles in the valley is very important.
4 But overall, we're here to support the staff
5 proposal. We appreciate the hard work of the staff in
6 devising ways to more efficiently spend these funds.
7 We're excited to see the growth and interest for the ZEV
8 consumer rebates or ZEV consumer incentives. And we think
9 this is exciting and really just incredibly important to
10 California's zero emission vehicle program.
11 So thank you and keep moving forward.
12 CHAIRPERSON NICHOLS: Thank you. And thanks for
13 all your support in this obtaining this fund in the first
14 place. So we appreciate that very much.
15 That is the last of witnesses who had signed up
16 to speak. So it's now time for some discussion.
17 I guess I have a couple of questions and other
18 Board members may, too. But there were two distinct
19 points that I heard that I think the staff should address
20 in a little bit more detail. The first was the issue
21 about whether there should be either a set-aside or some
22 form of special incentive for people who purchase electric
23 vehicles for car sharing programs versus for an individual
24 consumer. Obviously, a sharing program can reach a larger
25 number of people, larger number of households. And I'm 55
1 aware of the fact that these are increasingly popular
2 programs on college campuses and they tend to appeal to
3 younger consumers who at least generally are also less
4 affluent. So I'm curious if there's been any thought
5 about how to add any additional incentive there.
6 MR. PANSON: Well, we do recognize the value of
7 car share programs and we're trying to encourage them. I
8 think that's the whole genesis for us to take this step
9 and make the proposal to set aside ten percent of the
10 funds to ensure there is participation by car share
11 fleets.
12 We think that that -- we run through the analysis
13 and we believe that's the appropriate level of support in
14 this kind of challenging time.
15 As you've heard, we're up against a numbers game.
16 We have a limited amount of money. If we provide more per
17 vehicle incentives, it means fewer vehicles funded
18 overall. We're going to really struggle to meet demand
19 through the course of the year. If we do premium rebates
20 and bump ups, it means we are going to fall even further
21 short. We're in a tough and challenging situation.
22 CHAIRPERSON NICHOLS: A set-aside is a value and
23 especially if it's communicated to those who are
24 interested. That certainly is a valuable thing.
25 I guess somewhat related though -- it's not 56
1 exactly the same point. It wasn't brought up here. With
2 respect to people who purchased vehicles when there wasn't
3 any incentive money available, how are you planning on
4 dealing with those?
5 MR. PANSON: We actually anticipated that and
6 included provisions in the plan that you approved last
7 year. And we have a waiting list. And we've publicized
8 that so we're still taking people on the waiting list. I
9 think there's about 500 consumers on the waiting list.
10 But in setting up the waiting list, there is a
11 couple caveats that go with it. One, it's subject to the
12 Board approving and the Legislature making money
13 available. And two, we were going to -- the rebate levels
14 were going to be at the level that's approved for the
15 upcoming year.
16 CHAIRPERSON NICHOLS: The new going forward
17 level.
18 MR. PANSON: We're very clear about that on the
19 website. So those on the waiting list will get a rebate.
20 But if the Board approves our proposal, it's going to be a
21 $2500 instead of a $5,000 rebate.
22 Again, it's a matter of trying to stretch our
23 dollars as far as possible. And we were very clear and
24 transparent and up front to our consumers that when they
25 went on that waiting list they would be eligible for 57
1 whatever the new incentive level was. At the time that we
2 started taking people on the waiting list, we had
3 workshops. Our proposed was very well flushed out. I
4 think people knew it was going to be $2500.
5 CHAIRPERSON NICHOLS: Okay. And then I probably
6 somewhat more significant in big policy sense at least is
7 the issue about what kind of recognition should be given
8 to people who do manufacture within the state of
9 California. I'm sure you've given thought to this before.
10 I'd like to hear a little bit more about your rationale
11 and also question in terms of the timing of these funds
12 because of the fact that both of the firms that appear
13 today that are manufacturing in California of cars --
14 well, actually, all of them are California firms. But
15 they're all talking about the future. The cars aren't
16 here right now. So even if they're taking orders, they're
17 still not in a position to actually take advantage of
18 those incentive funds as I understand it.
19 So as Ms. Berg was suggesting to me a little bit
20 earlier today, we might want to do something just in terms
21 of reserving funds so hypothetically we don't use up all
22 the incentive funds at the beginning of year before people
23 who are here making them can make advantage of them.
24 Anyway, could you address that issue?
25 MR. PANSON: Yeah. It's definitely a challenging 58
1 issue. And AB 118 does and is actively supporting
2 in-state manufacturing. And AB 118 is more than just our
3 program. And I want to make sure we don't lose sight of
4 the fact that the Energy Commission is investing $55
5 million in in-state manufacturing plants and workforce
6 training to better train the California job force. So
7 that is --
8 CHAIRPERSON NICHOLS: This is specifically tied
9 to advanced vehicles?
10 MR. PANSON: Yes. It's part of their -- it's
11 through AB 118. So on the manufacturing, it's for design
12 and production capacity for advanced vehicles, electric
13 and hybrid vehicles, batteries, vehicle components. So
14 this isn't part of a larger pot that's going to all kinds
15 of different industries. This is for the vehicle industry
16 and the workforce training. By the same token, it's very
17 much intended to marry up with the technologies that we're
18 funding. So --
19 CHAIRPERSON NICHOLS: So it's important to
20 recognize this isn't the only pot of funding out there
21 that's available.
22 MR. PANSON: Yes.
23 And by doing the issue with the premium rebates
24 for California companies, again, it's the same issue that
25 we're talking about relative to car shares that is -- if 59
1 we give more higher rebate levels per vehicle, we're going
2 to fund fewer vehicles overall.
3 CHAIRPERSON NICHOLS: What about the issue of
4 setting aside some of the funding or at least not paying
5 it all out at the beginning?
6 MR. PANSON: That also presents some challenges
7 because what we're going to do is turn away some consumers
8 saying you're ready to buy a vehicle today and we're not
9 going to -- we've run out of money. If we are doing a
10 set-aside, we're taking it away from the general pot. So
11 we potentially will be telling consumers who are ready to
12 make a purchasing decision today or some months from now
13 that they can't take advantage, because we're holding
14 money aside for vehicles that actually are in active
15 production right now. That's presents a challenge.
16 CHAIRPERSON NICHOLS: Any other thoughts or
17 questions?
18 Yes, Dr. Sperling.
19 BOARD MEMBER SPERLING: I have a lot of
20 questions, you know, along the same lines. I guess I
21 don't fully understand how these are being set up. You
22 know, for instance, the car share. So I guess I'm not
23 even clear what's in the resolution.
24 CHAIRPERSON NICHOLS: How it works.
25 BOARD MEMBER SPERLING: How all this works. I 60
1 was testing out zero emission bicycles in France until
2 yesterday. So I didn't get a chance to catch up here.
3 CHAIRPERSON NICHOLS: Our hearts go out to you.
4 BOARD MEMBER SPERLING: So I request a little
5 sympathy here and patience.
6 So with the car share, for instance, if there is
7 a ten percent -- so I guess you're proposing -- it's in
8 the recommendation for the ten percent for car share. So
9 they get ten percent carve-out. And that means that ten
10 percent is set aside for the entire -- it's there for the
11 entire year, unless it's not used but then -- and it's the
12 same amount. It's the same $2500 per car amount?
13 MR. PANSON: Yes.
14 BOARD MEMBER SPERLING: And so if it's not used
15 at the end of the year --
16 MR. PANSON: If it's not used, it would flow back
17 into the general -- it's available for any consumer to
18 take advantage of. It will be spent on ZEV rebates. It
19 won't go back into the more general AQIP pot. It's going
20 to stay in the CVRP to incentivize consumer light-duty ZEV
21 rebates, but the car shares will have the first go at the
22 money.
23 BOARD MEMBER SPERLING: Since these are
24 business -- I know I definitely -- I've been a champion of
25 car sharing since the beginning. And so I'm very 61
1 supportive.
2 But in terms of making this work for -- if it's a
3 company that comes in, what happens if they fold up shop
4 six months later?
5 MR. PANSON: Yeah. That's actually a good
6 question.
7 Anyone who takes advantage of our rebate funding
8 is committing to keep a vehicle in California for three
9 years. When they sign on the dotted line to get our
10 money, they're making that commitment and agreeing to --
11 if they don't stay in California for the full three years,
12 they have to either, if they re-sell the vehicle, pass on
13 the pro-rated amount of the rebate to whoever is
14 purchasing the vehicle or return the money to the program.
15 BOARD MEMBER SPERLING: And one more thing on the
16 car sharing part. Are there any other companies that have
17 indicated interest in this program other than Mercedes?
18 MR. PANSON: Yes. There are a number of rental
19 car agencies are kind of exploring and in the process of
20 setting up car share elements to that business and have
21 come and talked to us expressed interest, expressed
22 support for the set-aside. So Car2Go, the people who
23 testified today, have kind of been the most active or the
24 most out in front. But there are other entities that are
25 interested in looking forward to and hoping to take 62
1 advantage of this funding.
2 BOARD MEMBER SPERLING: I could have some more
3 questions, but I think you were -- so another question is
4 this $2500, why not make it a thousand? Is there any
5 logic or rationale behind these numbers?
6 MR. PANSON: Yes.
7 CHAIRPERSON NICHOLS: It's not arbitrary and
8 capricious. Let me tell you that. It's based on a
9 strong --
10 BOARD MEMBER SPERLING: Lots of research.
11 CHAIRPERSON NICHOLS: Yes.
12 MR. PANSON: You know, eventually we're going to
13 continue to either reduce rebate levels or as I said next
14 year we're going to have to do something more targeted.
15 We've been funding 5,000 -- there's $5,000 had been the
16 target -- had been the number that's been out there for a
17 number of years. We realize we're not only seeing more
18 demand, we knew that we could lower the number. And we
19 really just want to take a stair-step approach.
20 I can tell you when we proposed at our April
21 round of workshops $2500, we actually got a fair amount of
22 push-back on that that they were going too far, too fast.
23 At the time we were doing that, there was still several
24 million dollars left in our pot. And I think the comments
25 that we're going too far, too fast, maybe had a little 63
1 more relevance at that time. Since that time, we've seen
2 an upsurge in demand, and we think we've hit the right
3 number.
4 BOARD MEMBER SPERLING: So the expectation is
5 we'll probably go down to a lower number next year.
6 MR. PANSON: Next year, the CVRP is likely going
7 to look very different, because we definitely will not be
8 able to meet this paradigm of everyone gets a rebate.
9 We'd likely have to go down to a number that's so low that
10 it doesn't serve as a motivating incentive anymore. And
11 what's the point of giving an incentive that doesn't
12 actually incent.
13 So, yes, you know, it's going to look very
14 different next year as soon as we catch our breath and
15 finish this year's funding plan and get this list out and
16 get funding out, we're going to immediately start thinking
17 about how we are going to revamp and redesign or move this
18 program forward. So it's going to be different next year.
19 But that's just a preview of coming attractions.
20 BOARD MEMBER SPERLING: Okay. And the amount --
21 following up on Chairman Nichols' question, these people
22 that are on the wait list, I guess I didn't understand
23 what that means. Is that because there is a lot of -- by
24 the end of this year, there's going to be an awful lot of
25 them on it. It seems like that will use up all of the 64
1 money from next year before we even get to next year. Am
2 I misunderstanding?
3 MR. PANSON: By next year, you mean the
4 money you're approving right now?
5 BOARD MEMBER SPERLING: Yeah.
6 MR. PANSON: We actually -- we realize -- we want
7 to take care of people on the wait list as quickly as
8 possible. Normally, the way we've been running this
9 program is we -- the Board adopts the plan. We then
10 develop and issue solicitations and make new funding
11 available kind of around the first of next year. We
12 realize that would be untenable given the fact we've run
13 out of money. So we actually have a solicitation fully
14 ready to go pending Board approval. And we hope to
15 release it as early as next week. It will be out for
16 30 days. And we hope to turn it around and sign a new
17 grant agreement to get the money back out to consumers as
18 early as hopefully mid September.
19 We're going to start to satisfy the waiting list
20 hopefully 45 days to 60 days from now. Right now, there's
21 500 consumers on that waiting list. So it is going to
22 take up some of this year's funding. But we hope to have
23 the funding flowing before the waiting list gets too much
24 higher.
25 BOARD MEMBER SPERLING: So you're saying you're 65
1 not allowing anyone else on the waiting list?
2 MR. PANSON: No. We continue to allow people.
3 We hope to have the money actively flowing in 45 to 60
4 days from now. There won't be a waiting list after that.
5 The money is going to go -- the program is going to be
6 live.
7 CHAIRPERSON NICHOLS: Back in real time.
8 Yes, DeeDee.
9 BOARD MEMBER D'ADAMO: I'd like to chat a bit
10 about this issue of the sweet spot and what it takes for
11 the Car Share Program. I don't know what that amount is,
12 but I guess, you know, of course, Car2Go is interested in
13 higher amount. Anybody would be.
14 But I'd like to hear your thoughts about at what
15 point is it not enough of an incentive such that it
16 wouldn't make a business case and it wouldn't end up
17 implementing the program. I don't know if you spent much
18 time with Car2Go and exactly what it would take. I think
19 there needs to be some way to include in the analysis that
20 we're getting more from those cars than we would a car
21 that is in the hands of the consumer.
22 Do you have any information about how many people
23 would cycle through a car share program?
24 And of course the other thing, too, is the big
25 splash that can't quite put a price tag on that. But the 66
1 big splash that a car share program would have as opposed
2 to an individual consumer or even at a rental agency where
3 maybe they have a few electric cars as opposed to a whole
4 program where there is a marketing scheme that goes with
5 it.
6 MR. PANSON: You know, we believe the program is
7 still going to go forward even at this incentive level.
8 Perhaps, you're -- some of the questions you're asking me
9 are questions that I think the car share entities should
10 answer. And I'm not going to try to answer for them.
11 But you know, we think we're at the right funding
12 level. And again if we provide higher rebates -- levels
13 for these, it means other people aren't getting taken care
14 of. So it's a hard trade-off to make.
15 BOARD MEMBER D'ADAMO: Maybe we should pull them
16 up here. I'd like to know and also --
17 BOARD MEMBER RIORDAN: I will -- if the gentleman
18 would like to come forward to respond to her very specific
19 question. I don't think we want to reopen a lot of
20 testimony.
21 BOARD MEMBER D'ADAMO: My co-counsel here is
22 nudging me for more questions. What I was going to say
23 also do you have information on how much individuals cycle
24 through those cars over a year or some period of time?
25 MR. COLE: I'll use Austin was our first launch 67
1 in North America. Those are combustion engines obviously.
2 We have 15,000 members in Austin. We see generally during
3 the course of a seven-day calendar week 4,000 rentals. So
4 each car is being utilized several times a day, if not
5 more.
6 And our membership, like I said, it is 15,000
7 people. And I would tell you based on the folks that --
8 we're just starting to do our internal studies on who's
9 using the car. But I would imagine based on who we know
10 are using the cars in Austin, for instance, they probably
11 wouldn't be in the market or able to purchase an EV like
12 this project would bring to the city.
13 BOARD MEMBER D'ADAMO: A question about the
14 business model on the 25 versus.
15 MR. COLE: The business model --
16 BOARD MEMBER D'ADAMO: At what point do you have
17 to walk away from it?
18 MR. COLE: It's a consideration, to be honest
19 with you. It's a significant investment, as I said.
20 We're looking at over $20 million to launch this program
21 in California. And so we did, we took the CVRP into
22 consideration. We built the business model. And of
23 course, the federal tax incentives as well.
24 BOARD MEMBER D'ADAMO: Just a follow-up for
25 staff. 68
1 Were car share programs and rental car agencies
2 treated the same with respect to that ten percent?
3 MR. PANSON: The ten percent is only for
4 dedicated car share fleets. Some rental car agencies are
5 interested in considering setting up car share programs.
6 So if a rental car agency sets up a car share fleet, a car
7 share program, yes, they would be eligible for the
8 set-aside. It's not a set-aside for rental car -- just
9 the normal rental car business model.
10 I guess one other point I also want to make is
11 that our incentive is part of the package that the car
12 share entities are going to be able to take advantage of.
13 I believe they're also eligible for the federal tax
14 credit, meaning they're getting the $7500 per year that's
15 coming to San Diego. And the reason they're coming to San
16 Diego is because of the tremendous infrastructure
17 investment that's been made in that region.
18 So, you know, our rebate in and of itself is not
19 the only thing that's drawing this car share program to
20 San Diego. So it's important to acknowledge that there's
21 other things that are feeding into this.
22 BOARD MEMBER D'ADAMO: The other question that I
23 have is that -- and I don't know enough about the car
24 share program and when it's planning on deploying the
25 cars. But if time runs out, I think that there should be 69
1 the discretion to allow those funds to be used for the car
2 share program if they're not used by the end of the
3 calendar year, rather than it going back into the general
4 pot. Do you have that discretion?
5 MR. PANSON: Yes. That level of sort of
6 implementation detail we -- the specific dates and that,
7 we establish in our implementation manuals for these
8 programs. If you want to give us some guidance or
9 direction on exactly how long we should leave the money
10 available for the car share fleets, we welcome that.
11 CHAIRPERSON NICHOLS: Supervisor Roberts.
12 BOARD MEMBER ROBERTS: I wanted to ask a couple
13 questions. I want to go back to some basic math and maybe
14 it will help us a little bit. We've got ten percent of
15 which number?
16 MR. PANSON: It's ten percent of the $15 million
17 that we're proposing for the CVRP. It's about $1.5
18 million set-aside.
19 BOARD MEMBER ROBERTS: So 1.5 help me. How many
20 cars is that going to be?
21 MR. PANSON: We can funds about 700 vehicles.
22 BOARD MEMBER ROBERTS: Seven-hundred. Put into
23 perspective, how many of these programs we have around the
24 state, that's a lot of cars. So it seems like there's
25 going to be adequate funding in here. 70
1 Do we have -- have you had contacts with enough
2 people to feel comfortable that we're going to go through
3 anywhere close to that in terms of new businesses?
4 MR. PANSON: You know, the other entities we've
5 talked to -- you know, the number of vehicles that they're
6 interested in would approach the full funding that we're
7 talking about when you look at Car2Go as well as the other
8 entities we're talking about. We think the demand could
9 be potentially in that 700 vehicle range.
10 BOARD MEMBER ROBERTS: That's really the
11 questions I was trying to get at. If we're matching the
12 program to the likely demand or if we are setting
13 something up and we're going to have a bunch of money left
14 over and we going to try to figure out what to do with it.
15 MR. PANSON: And the reason why we have the
16 provision for the money to flow back into the CVRP general
17 pot of money is that we're trying to meet multiple goals
18 here. We're trying to meet the funding target of 5600
19 full-functioning ZEVs is what we could fund with the $15
20 million allocation. So we'd like to see some fraction of
21 them up to 700 be in car share applications.
22 But if there wasn't a full demand for funding for
23 car shares, that money would go back into the general CVRP
24 pot, which would get us to our 5600 vehicle target. So I
25 think I see maybe the math that you're thinking about. If 71
1 we didn't think we're going to use all $1.5 million, we
2 could bump up the per-vehicle rebate amount to satisfy the
3 300 vehicles that they're talking about here.
4 By doing that, we're going to not meet our 5600
5 vehicle target. We're already telling you we think we're
6 not going to make it through the full funding year. So
7 when we do set-asides and we may choose to want to do a
8 bump up, but it means we're not -- going to end up further
9 behind in trying to meet the consumer demand.
10 BOARD MEMBER ROBERTS: Help me with the math 1.5
11 million divided by 2.5?
12 MR. PANSON: Yeah.
13 BOARD MEMBER ROBERTS: You're getting 700?
14 MR. PANSON: Yeah. There's some administrative
15 costs. So, you know, when we say 700, it reflects the
16 fact there is some administrative overhead.
17 BOARD MEMBER ROBERTS: Help me to understand also
18 what is the difference between what makes something car
19 sharing as opposed to car rental all or whatever your
20 other category is? You've talked about it and we've
21 thrown it around. It's not clear to me what the
22 distinction is.
23 BRANCH CHIEF BEVAN: Analisa Bevan with the
24 Sustainable Transportation Technology Branch.
25 We've defined car sharing programs within the 72
1 Zero Emission Vehicle Program to have intelligence
2 reservation systems to use shared use subscription
3 services. It is a more technologically advanced system
4 than a rental car program. It's not intended for
5 incidental use, but more regular use. And also often is
6 linked to transit. And we actually have provisions within
7 the zero emission vehicle regulation which provide
8 additional zero emission vehicle credit for such
9 applications for zero emission vehicles.
10 And I actually wanted to add that to this
11 discussion that ZEVs and plug-in hybrids which fall under
12 the zero emission vehicle regulation and are used in
13 shared car applications can earn as much as three times
14 more ZEV credit than they would if they were purchased or
15 used by a consumer. So that's an additional significant
16 incentive to put cars into car share applications.
17 BOARD MEMBER ROBERTS: I'm trying to understand
18 the business distinction between what we're setting -- I
19 mean, what would Hertz have to do to get into this
20 business?
21 BRANCH CHIEF BEVAN: They can get into the
22 business. There is a distinction between business where
23 they have a subscription contract with the user who always
24 comes back to that car and may use an online or smart
25 phone application to reserve that car or those kinds of 73
1 cars on a regular basis versus the incidental user who
2 walks into the rental agency and chooses to rental that
3 car or any other technology of car. If they've got a
4 subscription service and an intelligent reservation
5 system, then it's a shared car application.
6 CHAIRPERSON NICHOLS: The people seem to use them
7 quite differently.
8 BRANCH CHIEF BEVAN: Yes. And the rental car
9 agencies are an entity that want to get into this business
10 with a subscription and intelligence reservation system in
11 addition to their application of the technologies in a
12 more incidental situation.
13 BOARD MEMBER ROBERTS: It sounds like you're
14 confident by the end of this period that all of these
15 rebates in effect will be requested and used as part of
16 the ride sharing program.
17 MR. PANSON: Yeah. We have interest, but you
18 know.
19 BOARD MEMBER ROBERTS: It sounds like weakly
20 optimistic maybe.
21 MR. PANSON: More than weakly optimistic, but
22 less than fully optimistic. I'm sorry.
23 BOARD MEMBER ROBERTS: That's the ultimate
24 answer.
25 BOARD MEMBER RIORDAN: But we don't have 74
1 knowledge of their business plans. We don't have
2 knowledge of their capital. And so you're hoping they're
3 successful. But you know, like any new venture, there's
4 no way in the world to know if these people are going to
5 come forward and actually make the purchase.
6 My feeling is as long as we have an alternative
7 where we can take whatever is in that pot leftover and
8 somebody's business plan doesn't work out and we can
9 redistribute it to people who are buying an electric
10 vehicle, well, I'm comfortable with it. But I don't know
11 whether these people ever make it in the world. I hope
12 they do. But I don't know.
13 And one thing we ought to do -- and it could give
14 somebody an excellent little project at some university --
15 is to follow this evolution of use of transportation and
16 see what we're really -- how far are they driving? Where
17 are they going?
18 CHAIRPERSON NICHOLS: Luckily, we have some
19 connections with universities. That's a good project.
20 All right.
21 Unless there are any other burning questions at
22 this point, I'm going to ask for a motion.
23 BOARD MEMBER BERG: I would just like to ask a
24 quick -- because I'm not quite sure where we're going yet.
25 Are you going to put that in the motion? 75
1 CHAIRPERSON NICHOLS: I wasn't actually planning
2 on making any changes. I was just going to ask to move
3 the recommendation at this point.
4 But if there are any specific amendments that
5 people would call on or request they want to add to, I
6 think we should be open to that.
7 BOARD MEMBER BERG: I guess for future, my
8 concern is that it feels to me that the funding is
9 benefiting a the right time at the right place. So those
10 manufacturers that happen to have cars coming out today
11 are really going to benefit just because of good timing.
12 And I think we have a lot of exciting cars coming
13 out. And part of this incentive program is to incentivize
14 from our perspective a lot of different types of vehicles
15 from many manufacturers to move this whole process
16 forward, not to incentivize the manufacturer that is
17 benefiting from good timing and therefore we have kind of
18 all of our eggs in a few baskets of technology rather than
19 spreading the incentive.
20 So for future, I'm not suggesting anything today.
21 But certainly for future, I would be interested in being
22 mindful that we really want to have as many clean cars out
23 on the marketplace that are gaining momentum that are
24 giving us information that can drive this technology
25 forward. 76
1 CHAIRPERSON NICHOLS: I totally agree with you.
2 I guess I would just add, as I understand it, there are
3 people looking at the future of 118 and a number of kind
4 of significant changes to reflect the information that
5 you've gained over the last few years and the phenomenal
6 success we've had. This program needs more money. And
7 when it gets more money, we need to be able to spend it I
8 think in ways that accomplish the kinds of goals you're
9 talking about. So points well taken.
10 BOARD MEMBER RIORDAN: Do you need a motion?
11 CHAIRPERSON NICHOLS: I do.
12 BOARD MEMBER RIORDAN: I'd like to move --
13 CHAIRPERSON NICHOLS: Staff wants to add
14 something else.
15 MR. PANSON: I'm going to defer to Tom.
16 CHAIRPERSON NICHOLS: Tom has moved to speak and
17 I think we should hear from him.
18 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:
19 Ms. Berg, I think that's an example of one of the targeted
20 approaches that we could consider for next year for -- I
21 think what you're suggesting is if you're a new
22 manufacturer into the marketplace, maybe you could have
23 incentives for the first X vehicles. And then after that,
24 you wouldn't get any. That would be one of the kind of
25 things that we could look at next year when quite simply 77
1 the number of vehicles being sold is going to drive our
2 ability to fund anything more than a few hundred dollars
3 probably if we gave it to everybody. So that's a great
4 idea.
5 BOARD MEMBER BERG: Another thing. This is a
6 great problem to have. From a business perspective, this
7 really means that we're looking at the right things and
8 when you have too much, that's not a bad problem.
9 MR. PANSON: I'll just remind the Board, we bring
10 the plan to you every year with every new funding
11 allocation. You're going to see us a year from now and be
12 able to tell us whether you like the approach we're
13 taking.
14 CHAIRPERSON NICHOLS: We're going to want
15 changes. We'll be in conversations before that, I'm sure.
16 BOARD MEMBER D'ADAMO: I'd like to make a motion,
17 but just want to make certain that the Resolution will
18 include language directing staff to come back next year
19 with some type of approach to address the San Joaquin
20 Valley issues that I raised earlier.
21 CHAIRPERSON NICHOLS: Yes. And also to raise the
22 issues about the making we're properly incentivizing new
23 technologies that are going to contribute to our air
24 quality goals here. And not just the -- because we're
25 clearly at a point of success where if they get to where 78
1 they want, Nissan could -- customers of the Leaf could get
2 all the funds. And that would be good for us in one sense
3 but not accomplishing all of our goals.
4 BOARD MEMBER SPERLING: Along those lines, we
5 didn't talk much about the heavier vehicles. And I think
6 I'd like to add something that there be some assessment of
7 how we make sure we're really strategically stimulating
8 investments in trucks, use of hybrid and electric drive
9 technology in trucks. Because that's probably in many
10 ways more important. We're likely to have a more
11 beneficial impact there. But we need to think about it
12 strategically.
13 CHAIRPERSON NICHOLS: Okay. So there's three
14 points we'd like included in the resolution. We have a
15 motion from Ms. D'Adamo.
16 Do we have a second?
17 BOARD MEMBER RIORDAN: Second.
18 CHAIRPERSON NICHOLS: All in favor, please say
19 Aye.
20 (Ayes)
21 CHAIRPERSON NICHOLS: Opposed? None.
22 Thank you very much.
23 This has really been an interesting discussion.
24 Appreciate everybody who come out to give us their input.
25 Okay. 79
1 This is a public hearing to consider the approval
2 of the proposed State Implementation Plan revisions for
3 the eight-hour ozone standard, and minor technical
4 revisions to the PM2.5 transportation conformity budget --
5 changes to the 8-hour and PM2.5 SIP transportation
6 conformity budgets. Hard to get all that into one
7 mouthful. Thank you, everybody.
8 And just to explain a little bit, what we're
9 talking about here relates to an action that we took with
10 respect also to the South Coast and San Joaquin in
11 December where we acted on the diesel rules for in-use
12 trucks and off-road equipment. We made similar technical
13 revisions to the SIPs for the South Coast and the San
14 Joaquin Valley in April for the PM2.5 SIPs. And now we're
15 going back to the ozone SIP.
16 This stuff is mind-numbing, if I may say so.
17 This is to people that sit on this Board and pay attention
18 to these issues. I hope we can explain it in our
19 presentation here to the satisfaction of -- I know some
20 people always say it's for their mother or their great
21 aunt or whoever. Let's try to explain it for the benefit
22 of anybody in the audience.
23 Mr. Goldstene.
24 EXECUTIVE OFFICER GOLDSTENE: Let me see what I
25 can do here? 80
1 As a result of the revisions of the PM2.5 SIPs
2 that you took action on in April, EPA has now proposed to
3 approve the South Coast and San Joaquin Valley PM2.5 SIPs,
4 with the exception of a contingency measure issue we're
5 still working on with EPA.
6 EPA's final approval would recognize actions
7 taken by ARB and the South Coast and San Joaquin Valley
8 districts to comply with the 2014 attainment deadline.
9 Today, staff is proposing parallel revisions for
10 ozone. These revisions will provide the necessary
11 information for EPA to fully approve the San Joaquin
12 Valley and South Coast 8-hour ozone SIPs. Under a consent
13 decree, EPA must take final action on these ozone SIPs by
14 December 15th of this year.
15 Staff is proposing to update the progress
16 calculations and transportation conformity budgets to
17 account for emission inventory improvements and regulatory
18 action since the SIPs were adopted in 2007. Staff is also
19 proposing to revise the rulemaking calendar for the
20 agricultural equipment measure for the San Joaquin Valley
21 consistent with the other remaining measures.
22 Finally, staff will update the action ARB and the
23 districts are taking too identify and implement advanced
24 technologies to reduce ozone-forming emissions.
25 Mr. Jeff Lindberg with the Air Quality and 81
1 Transportation Planning Branch will now provide the staff
2 report and describe the proposed SIP revision.
3 Jeff.
4 (Thereupon an overhead presentation was
5 presented as follows.)
6 CHAIRPERSON NICHOLS: So far you're doing great.
7 EXECUTIVE OFFICER GOLDSTENE: Thank you.
8 AIR POLLUTION SPECIALIST LINDBERG: Thank you,
9 Mr. Goldstene.
10 Good morning, Madam Chair and members of the
11 Board.
12 In this presentation, I'll describe California's
13 progress implementing the 8-hour ozone State
14 Implementation Plans, or SIPs, in the South Coast and San
15 Joaquin Valley -- San Joaquin Valley and present a
16 proposed SIP revisions to account for the Board's recent
17 actions to reduce emission from diesel-fueled vehicles and
18 equipment. The revisions to ozone SIPs staff is proposing
19 today largely mirror these the Board adopted in April for
20 the PM2.5 SIPs.
21 --o0o--
22 AIR POLLUTION SPECIALIST LINDBERG: Today, we are
23 asking the Board to approve revisions to the South Coast
24 and San Joaquin Valley ozone SIPs. Staff's as proposed
25 ozone SIPs revisions are limited to reasonable further 82
1 progress tables and associated reductions for contingency
2 purposes, adjustments to the transportation conformity
3 budgets, an updated ARB rulemaking calendar for the in-use
4 agricultural equipment measure, and an update describing
5 ARB's actions to identify advanced emission control
6 technologies.
7 Finally, ARB staff is proposing minor technical
8 updates to the PM2.5 SIP transportation conformity budgets
9 for the South Coast and San Joaquin Valley.
10 --o0o--
11 AIR POLLUTION SPECIALIST LINDBERG: Let's start
12 with a brief look at where we are in the ozone SIP
13 process.
14 --o0o--
15 AIR POLLUTION SPECIALIST LINDBERG: In 2007, the
16 Board approved the South Coast and San Joaquin Valley
17 ozone SIPs and submitted them to U.S. EPA for approval.
18 Both the South Coast and San Joaquin Valley have the most
19 significant ozone attainment challenges in the nation, so
20 the SIPs identified an expeditious attainment deadline of
21 2023 as allowed by the Clean Air Act.
22 The core of those SIPs was the State's strategy
23 to control emissions through the accelerated turnover of
24 existing diesel-powered vehicles and equipment and to
25 clean up emission source associated with California's 83
1 major ports.
2 Recognizing the challenge these two areas were
3 faced with, the SIPs also included the commitment to
4 reduce emissions through long-term advanced technology
5 strategies.
6 --o0o--
7 AIR POLLUTION SPECIALIST LINDBERG: As soon as
8 the SIPs were adopted, ARB and the districts began
9 implementation with a focus on reducing emissions from
10 existing diesel vehicles and equipment.
11 The Board adopted regulations that accelerate the
12 cleanup of commercial trucks, off-road construction and
13 mining equipment, and goods movement equipment used at
14 ports and rail yards.
15 The Board also adopted controls on consumer
16 products, which are significant sources of ozone-forming
17 volatile organic compound emissions. To ensure passenger
18 vehicles remain as clean as possible, the California
19 Bureau of Automotive Repair strengthened the Smog Check
20 Program by including diesel vehicles, tightening cut
21 points, and inspecting evaporative emission control
22 systems.
23 Both the South Coast and San Joaquin Valley Air
24 Districts have also taken significant actions to meet
25 commitments to reduce emissions from sources under their 84
1 jurisdictions.
2 --o0o--
3 AIR POLLUTION SPECIALIST LINDBERG: Today's
4 revisions are needed in order to account for emission
5 changes due to the Board's recent actions. The revisions
6 follow the same methodology staff used to revise the PM2.5
7 SIP in April of this year. Since the Board's April action
8 only applied to the PM2.5 SIPs, the staff is now proposing
9 revisions to the ozone SIPs. EPA is currently reviewing
10 the South Coast and San Joaquin Valley ozone SIPs for
11 federal approval and is required to complete this review
12 by December of this year.
13 --o0o--
14 AIR POLLUTION SPECIALIST LINDBERG: I'll now turn
15 my focus to the proposed SIP revisions.
16 --o0o--
17 AIR POLLUTION SPECIALIST LINDBERG: There are
18 four parts to ARB's proposed ozone SIP revisions. The
19 first two updates are largely accounting exercises to
20 reflect recent State and local rulemaking actions and the
21 economic recession.
22 With respect to the reasonable further progress
23 demonstrations, our current estimates now indicate that we
24 are achieving even greater near-term emission reductions
25 than was envisioned when the SIPs were initially adopted. 85
1 In addition to meeting the required progress
2 benchmarks, the updated demonstrations continue to set
3 side sufficient additional reductions to satisfy federal
4 contingency measure requirements. The proposed
5 transportation conformity budgets ensure that emissions
6 from motor vehicles remain within the limits established
7 in the SIPs and reflect adopted regulations.
8 Staff is also proposing minor technical updates
9 to the PM2.5 SIP transportation conformity budgets. These
10 updates account for emission reduction changes in district
11 mobile source measures as well as correct minor data entry
12 errors in the existing PM2.5 SIP budgets.
13 In May, EPA approved the San Joaquin Valley's
14 indirect source review, or ISR, rule, but disallowed
15 California from taking direct emission reduction credit
16 for the rule. The proposed budgets account for EPA's
17 action. The rule requires an land developers to mitigate
18 the indirect emissions from new development or pay a
19 mitigation fee to the district to fund off-site emission
20 reduction programs. We will work with EPA to quantify the
21 benefits as they occur so that credit can be taken in the
22 future.
23 In the South Coast, the updated budget reflects
24 changes to how the district quantifies emission reductions
25 achieved through the high-emitting vehicle identification 86
1 program. The program funds durable repairs on
2 high-emitting vehicles or incentivizes their removal
3 through the district's vehicle scrap and replace program.
4 The PM2.5 budgets initially included the emission
5 reductions district staff expected to achieve through the
6 measure. However, the actual emission reductions achieved
7 by the high emitter ID program have not yet been
8 quantified by the district. The district remains
9 committed to implementing this program and achieving the
10 committed emission reductions.
11 --o0o--
12 AIR POLLUTION SPECIALIST LINDBERG: Similar to
13 the rulemaking calendar's updates approved in April, staff
14 is proposing to update the rulemaking calendar for the
15 cleaner in-use agriculture equipment measure. This
16 measure, along with the measures updated in April, will be
17 brought to the Board for consideration in 2013.
18 The April revision addressed the outstanding
19 commitments that would be in place for PM2.5 attainment.
20 While the San Joaquin Valley's PM2.5 SIP did not rely on
21 emission reductions from the agricultural equipment
22 measure, the Valley's ozone SIP did. Staff is not
23 proposing changes to the specific measure beyond the
24 regulatory development timing.
25 Early reductions are already occurring through 87
1 incentive-based programs, such as one run by the Natural
2 Resources Conservation Service to modernize California's
3 agricultural tractor fleet. To date, the NRCS and the
4 Valley Air District have provided more than $40 million to
5 modernize more than 800 tractors in the San Joaquin Valley
6 and the district is currently soliciting an additional
7 projects to replace 700 more tractors over the next year.
8 --o0o--
9 AIR POLLUTION SPECIALIST LINDBERG: Finally,
10 staff is proposing to update the long-term strategy
11 commitment to expand the discussion of actions that ARB
12 and the districts are taking to identify and implement
13 advanced technologies to reduce ozone-forming emissions.
14 For 8-hour ozone non-attainment areas classified
15 as extreme, the Federal Clean Air Act allows ozone SIPs to
16 include a long-term strategy for identifying and
17 implementing advanced technology measures. These advanced
18 technologies must be implemented by 2020.
19 --o0o--
20 AIR POLLUTION SPECIALIST LINDBERG: As California
21 moves towards a low-carbon future, many of the
22 technologies and strategies that reduce the state's
23 impacts on climate change will also reduce emissions from
24 the same combustion sources that are the root of the
25 State's ozone attainment challenges. 88
1 While still in the early stages of development
2 and commercialization, we expect that by 2020 we would see
3 lower emission energy and vehicle technologies and more
4 efficient transportation and goods movement systems.
5 These technologies and systems would serve the dual
6 purpose of meeting California's ozone challenges and
7 reducing the state's contribution to global climate change
8 as required by AB 23.
9 --o0o--
10 AIR POLLUTION SPECIALIST LINDBERG: Demonstrating
11 advanced technologies is a collaborative effort at the
12 State, federal, and local levels. One year after the SIPs
13 were adopted, ARB, EPA, and the South Coast and San
14 Joaquin Valley Air Districts signed a Memorandum of
15 Agreement establishing the Clean Air Technology
16 Initiative, with the purpose of evaluating innovative
17 technologies that have the potential to reduce emissions.
18 As you heard earlier this morning, California's
19 Assembly Bill 118 established ARB and CEC programs with
20 the goal of fostering advanced clean technologies for
21 vehicles and the fuels they use. During the previous
22 item, staff outlined the important air quality investments
23 the staff is making for the two programs.
24 Locally, both the San Joaquin Valley and the
25 South Coast Air Districts have programs to explore 89
1 advanced technologies that could reduce emissions from
2 sources within their boundaries. In each of these
3 efforts, there is extensive collaboration.
4 --o0o--
5 AIR POLLUTION SPECIALIST LINDBERG: In addition
6 to the four SIP elements I just described, staff also
7 looked at the impacts the improvements to the emissions
8 inventory that resulted from recent rulemaking activities
9 would have on the air quality modeling in the South Coast
10 and San Joaquin Valley.
11 Although the emission changes in both the South
12 Coast and San Joaquin Valley are small, the changes in the
13 San Joaquin Valley are larger due to additional
14 improvements in the PM2.5 SIP that was developed in 2008.
15 Determining the specific impacts of these
16 improvements on the attainment emissions targets can only
17 be done through a comprehensive new air quality modeling
18 effort. Based on a qualitative analysis of the modeling,
19 ARB staff believe the attainment target is still
20 appropriate, which would reflect a 72 percent reduction in
21 NOx emissions for 2002 levels. However, up to a 75
22 percent reduction could be needed based on the inventory
23 used in the original modeling. In either case, the
24 Board's commitment in the 2007 State strategy is to
25 achieve the emission levels that are needed to provide for 90
1 attainment.
2 In order to re-evaluate the attainment targets,
3 we plan to conduct new air quality modeling reflecting an
4 updated emissions inventory. We would commit to complete
5 this modeling by the end of 2014 or the deadline for
6 submission of new SIPs for the expected revision to the
7 8-hour ozone standard, whichever is earlier. This revised
8 modeling would be used to establish updated emission
9 targets and define the emission reductions needed as part
10 of the long-term strategy that must be in place by 2020.
11 ARB staff had a productive discussion with EPA regarding
12 this approach, and we will continue to work with them to
13 ensure the ozone SIP is approvable.
14 --o0o--
15 AIR POLLUTION SPECIALIST LINDBERG: In closing,
16 staff recommends that the Board approve submittal of the
17 SIP revisions and transportation conformity budgets to
18 EPA. Doing so will provide EPA with the information it
19 needs to approve California's ozone SIPs as well as the
20 PM2.5 SIP transportation conformity budgets.
21 Thank you.
22 CHAIRPERSON NICHOLS: Would you anticipate then
23 that these changes being forwarded to EPA that EPA will be
24 able to approve these SIPs in December?
25 DEPUTY EXECUTIVE OFFICER TERRY: Yes. We did get 91
1 a letter from EPA you should have in your packet. And
2 they recognize, as you heard in the staff report, that
3 comprehensive modeling would need to be done to really
4 address the uncertainty as to whether it's a 72 or a 75
5 percent reduction that's ultimately needed.
6 So our commitment that was embedded in the 2000
7 SIP that the Board approved essentially included a 75
8 percent reduction commitment. So that would go forward
9 and remain in place. We're not proposing any changes to
10 that commitment.
11 CHAIRPERSON NICHOLS: We also had a recent bit of
12 controversy with the EPA over the issue of NOx versus VOC
13 reductions in the Valley SIP. Is that issue also in the
14 course of being resolved in this way or some other path to
15 resolution?
16 DEPUTY EXECUTIVE OFFICER TERRY: Actually, that
17 was happily resolved with their proposal to approve the
18 PM2.5 SIP. And this is only for ozone. So it's not an
19 issue here.
20 CHAIRPERSON NICHOLS: Good. Okay. Glad to hear
21 it.
22 Dr. Sperling.
23 BOARD MEMBER SPERLING: Along the theme of
24 mind-numbing, you know, I used to know a fair amount about
25 transportation conformity budgets. They never made much 92
1 sense to me years and years ago. I mean, are we -- is
2 this -- should I be paying attention to that?
3 DEPUTY EXECUTIVE OFFICER TERRY: We're relieving
4 you of that painful obligation.
5 The bottom line is that the conformity budgets
6 are very important to ensure that the transportation
7 planning process is consistent with the air quality
8 planning process. So the budgets that have to be adopted
9 must be consistent with the emission estimates for on-road
10 vehicles that are in the progress calculations as well as
11 the attainment calculation. So that's the purpose of all
12 the back and forth. And when we have the on-road truck
13 rule and new emission estimates, then that needs to be --
14 the budgets need to be adjusted.
15 So, for example, we would not want a growth in
16 VMT to overtake the benefits of our truck rule, for
17 example. So that's why we do these adjustments.
18 BOARD MEMBER SPERLING: Not to be demeaning, but
19 is this really just in the noise or -- these conformity
20 budgets? You know, I remember --
21 CHAIRPERSON NICHOLS: Do they constrain anything
22 or push any action --
23 BOARD MEMBER SPERLING: Exactly.
24 DEPUTY EXECUTIVE OFFICER TERRY: Well, they're
25 essentially a backstop because under state law we're 93
1 required to take the VMT estimates and the transportation
2 plan and imbed them in the SIP. So at the time of the
3 planning process, that's where the opportunity is to
4 achieve more reductions from the transportation sector.
5 But once those plans are in place, it's critical
6 that those same assumptions and estimates or projections
7 be incorporated into the SIPs so that there's not any
8 consistency. And that's -- you know, you can say it's in
9 the noise from a calculational standpoint where we make
10 these minor adjustments, but it's really an essential part
11 of the ZIP planning that we have a sound estimate of the
12 transportation emissions for the future.
13 BOARD MEMBER SPERLING: Being a little more
14 positive with the SB 375 process where models are being
15 developed that really are more fine-grained really than
16 anything I understand used for the conformity analysis, is
17 there some way of taking advantage of those models,
18 creating some kind of synergies here somehow out of this
19 mess of models and calculations and, you know, to create a
20 more substantive exercise that really is useful for
21 creating incentives and guiding investments and so on?
22 DEPUTY EXECUTIVE OFFICER TERRY: That's a great
23 question, and it is very much a positive. Over the years,
24 the transportation -- details of the transportation
25 modeling has not been something that has had a lot of 94
1 scrutiny within a SIP planning process. So this has been
2 very impressive how the NPOs have opened up their books
3 and posting all the data. They are running sensitivity
4 analysis as we do of the staff's technical review of the
5 greenhouse gas reductions attributed to the sustainable
6 communities strategies within the transportation plans.
7 There is a lot of work going onto make it more
8 transparent and open; the opportunity to run different
9 types of scenarios. As we move forward, to improve the
10 models so that the benefits of sustainable community
11 strategies can better be accounted for. And when we had
12 our Regional Targets Advisory Committee, there was a lot
13 of discussion about the need to improve the models to
14 better reflect some of these important strategies we
15 expect to be developed under SB 375.
16 So we think it's very important work that's going
17 on that will help us with our SIP process and improve the
18 modeling all around.
19 BOARD MEMBER SPERLING: I know you've got at
20 least one great modeler on your staff, a good U.C. Davis
21 graduate that will help with this.
22 DEPUTY EXECUTIVE OFFICER TERRY: Absolutely.
23 More than one.
24 CHAIRPERSON NICHOLS: Okay. Anybody else want to
25 speak up on behalf of any other University of California 95
1 branch or any other programs?
2 I have no witnesses who have signed up to speak
3 on this item, so I believe my assessment of it was
4 correct.
5 However, I know it's important. And in all
6 seriousness, it's an important step forward because it
7 will enable us to have an approved SIP. And that's
8 probably something that -- we know that's something of
9 great value and not something we've always had. That
10 really is good news.
11 I would like to ask for a motion to approve the
12 staff recommendation.
13 BOARD MEMBER RIORDAN: I would so move, Madam
14 Chair, and thank staff for briefing me on this. It's a
15 very positive thing moving forward.
16 CHAIRPERSON NICHOLS: Second?
17 BOARD MEMBER BERG: Second.
18 CHAIRPERSON NICHOLS: All in favor please say
19 Aye.
20 (Ayes)
21 CHAIRPERSON NICHOLS: Any opposed?
22 Great. Thank you. And congratulations.
23 CHAIRPERSON NICHOLS: We have one other item
24 before us that is a very pleasant duty, but before I do
25 that, I'm actually going to call for public comments, 96
1 because when we're done, we're going to adjourn the
2 meeting. So if I may, if there's anyone in audience who
3 is here hoping to speak during the open public comment
4 time -- we have one. Okay.
5 Reede Stockton of the Center for Community,
6 Democracy, and Ecology. Please come forward.
7 MR. STOCKTON: Chairman Nichols and members of
8 the Board, thanks for very much for this opportunity to
9 speak with you today.
10 I want to make three procedural recommendations
11 regarding to the scope -- and regarding the Scoping Plan
12 functional equivalent document that you're due to consider
13 on August 24th.
14 AB 32 specifically directs ARB to avoid
15 disproportionate impacts on communities of color and
16 low-income communities and to ensure that GHG reduction
17 activities complement existing air quality regulations and
18 reduce toxic air contaminant emissions. And to ensure
19 that ARB took that direction seriously, the Board was
20 further directed to empanel an Environmental Justice
21 Advisory Committee consisting of representatives from
22 impacted communities throughout the state that included
23 low-income communities and communities of color.
24 The Environmental Justice Advisory Committee
25 convened by ARB has recommended against cap and trade, but 97
1 ARB has chosen to disregard that recommendation. And I
2 think it's an indication of the working relationship that
3 ARB has had with the Environmental Justice Advisory
4 Committee that seven of the eleven members of EJAC are
5 parties to the lawsuit that was brought against ARB and
6 asking to reconsider the cap and trade recommendation.
7 So the question now is how to repair the
8 relationship between ARB and communities of color and
9 low-income communities. And that's the purpose of the
10 three recommendations I have.
11 I'd like to recommend that ARB slow down the time
12 line for consideration of the functional equivalent
13 document supplement.
14 Second, I'd like to recommend that ARB fully
15 consider a broad range of alternatives to cap and trade by
16 expanding the options considered in both number and
17 detail.
18 And third, I'd like to recommend that ARB hold a
19 series of hearings to consider those alternatives in the
20 communities that are most heavily impacted by toxic air
21 contaminants.
22 There's still an opportunity for ARB to
23 demonstrate that it strongly supports the environmental
24 justice mandate in AB 32. And I'd like to urge ARB to
25 take advantage of that opportunity. 98
1 CHAIRPERSON NICHOLS: Thank you. Thank you.
2 Did you have a written version of those comments?
3 MR. STOCKTON: No, but I will be submitting some
4 written comments.
5 CHAIRPERSON NICHOLS: Thank you very much. I
6 took notes. Appreciate your coming. Okay.
7 We have another public commentor?
8 MR. FOLKS: Yes. Hi, Madam Chair. Tom Folks
9 here with MightyCon representing Bosch, Audi, BMW,
10 Daimler, and BMW.
11 Just a reminder to some of your Board members,
12 I've been talking to Clarlyn Fraiser of your staff. We
13 have a couple diesel cars out at the corner of I and 10th
14 Street. Between now and the time you get to your next
15 engagement after this, please stop by and test drive a
16 car. Won't take you but a few minutes. We're right
17 outside.
18 CHAIRPERSON NICHOLS: Thank you.
19 If we don't go to the car, the cars will come to
20 us.
21 It's now my pleasant responsibility here to move
22 on to the Haagen-Smit Clean Air Awards. And I believe the
23 idea is that I'm going to move down there to the present
24 the awards with Mr. Goldstene's help and that the award
25 recipients will come forward. 99
1 EXECUTIVE OFFICER GOLDSTENE: We have some
2 opening --
3 CHAIRPERSON NICHOLS: Oh, we do.
4 EXECUTIVE OFFICER GOLDSTENE: We have slides and
5 pictures.
6 CHAIRPERSON NICHOLS: That happens before we
7 present the award.
8 EXECUTIVE OFFICER GOLDSTENE: Yes.
9 CHAIRPERSON NICHOLS: Sorry. I wasn't here for
10 the rehearsal. I was in Washington.
11 EXECUTIVE OFFICER GOLDSTENE: It's been carefully
12 blocked.
13 CHAIRPERSON NICHOLS: Oh, look. People are
14 coming forward. This is great. This is so well
15 organized. I see the awards lined up there. They look
16 beautiful.
17 So which part of this script do I get to read?
18 EXECUTIVE OFFICER GOLDSTENE: You could actually
19 read the script. I think either one of us could make this
20 presentation. There are a series of slides --
21 CHAIRPERSON NICHOLS: The thing that says
22 discussion at the beginning? I have some slides.
23 EXECUTIVE OFFICER GOLDSTENE: Where it says slide
24 one.
25 CHAIRPERSON NICHOLS: Oh, I do. It begins by 100
1 saying the Haagen-Smit awards. Our Executive Officer,
2 James Goldstene, will introduce the awards and this year's
3 recipients. I will then invite each recipient to come to
4 the podium to receive their award and say a few words.
5 EXECUTIVE OFFICER GOLDSTENE: How's that?
6 CHAIRPERSON NICHOLS: Perfect.
7 (Whereupon a slide show presentation was made
8 as follows.)
9 EXECUTIVE OFFICER GOLDSTENE: So I'll go through
10 the slides as quickly. We're showcasing this year's
11 Haagen-Smit Clean Air award recipients here at today's
12 Board meeting.
13 At this annual events, we are reminded of the
14 important contributions of late Arie Haagen-Smit that he
15 made to air pollution science and the significance of his
16 career as ARB's first Chairman.
17 --o0o--
18 EXECUTIVE OFFICER GOLDSTENE: Haagen-Smit was the
19 native of the Netherlands, was a leader in developing air
20 quality standards based on his research efforts and is
21 known by many as the Father of Air Pollution Control.
22 Through a series of experiments, he found that
23 most of California's smog resulted from photochemistry
24 which emissions from motor vehicles and industrial
25 facilities reacted with sunlight to create ozone. This 101
1 breakthrough provided the scientific foundation for the
2 development of nationwide air pollution control programs.
3 Next slide.
4 --o0o--
5 EXECUTIVE OFFICER GOLDSTENE: Since 2001, the Air
6 Resources Board has sponsored the Haagen-Smit Clean Air
7 Awards. The awards are given to two or three people each
8 year to recognize significant career efforts in at least
9 one of several air quality categories, which are research,
10 environmental policy, science and technology, public
11 education or community service. Over the last ten years,
12 25 distinguished individuals have received the award.
13 This year's winners were chosen based on their
14 individual accomplishments. Although they all have
15 something in common, all three winners have contributed to
16 our efforts in California to reduce the health impacts of
17 diesel PM.
18 I'm pleased to announce the three recipients of
19 the award. Actually, Chairman Nichols, maybe you should
20 do this.
21 You can pick up or I can just --
22 CHAIRPERSON NICHOLS: I could begin with the
23 individual presentations. I would be thrilled to do that
24 actually.
25 EXECUTIVE OFFICER GOLDSTENE: Yes. 102
1 CHAIRPERSON NICHOLS: So I can read information
2 about them, and then I may editorialize a little bit
3 though in addition to what's the official script. I can't
4 help myself. Okay.
5 So our first awardee is Dr. John Froines, who's
6 being recognized for his work in the area of environmental
7 health research.
8 And is there a slide that's going to come up
9 here?
10 Dr. Froines has a long history of teaching and
11 conducting research on air pollution related health
12 effects. He's a professor in the Department of
13 Environmental Health Sciences at UCLA. He joined this
14 faculty of the School of Public Health in 1981. He holds
15 several key positions in health sciences and toxicology
16 programs, including serving as director of the Southern
17 California Particle Center and super site. He's also
18 Associate Director of the Southern California
19 Environmental Health Sciences Center and Director of the
20 UCLA Fogarty Program in Occupational and Environmental
21 Health. He has served as Director of UCLA's Center for
22 Occupational and Environmental Health Sciences for 25
23 years and was Deputy Director of the National Institute
24 for Occupational Safety and Health before coming to UCLA.
25 He also Chairs California's Scientific Review Panel on 103
1 Toxic Air Contaminants.
2 Dr. Froines' area of expertise is toxicology and
3 exposure assessment. His air pollution related research
4 includes studying the health effects of exposure to
5 particulate matter, lung cancer, and non-cancer health
6 effects attributable to air pollution and the biochemical
7 mechanism of the carcinogenicity of toxic air
8 contaminants.
9 Dr. Froines' teaching and research is highly
10 regarded for enhancing the understanding of toxic air
11 contaminants and their health impacts through his
12 dedication to translating scientific information in ways
13 that are useful for public policy setting. His work has
14 had a tremendous impact nationally and internationally.
15 Last year, his strong commitment to outstanding
16 research was recognized by the South Coast Air Quality
17 Management District for the Clean Air Award for his
18 promotion of good environmental stewardship.
19 I hate to be second to the AQMD in anything, but
20 in this regard, I'm happy to be able to join them in this
21 regard. As you can hear from what I've just read, John
22 has an extraordinary record as a scientist and as a public
23 servant. And we are thrilled to be able to recognize him
24 today for his commitment to providing strong scientific
25 basis for our actions. So thank you very much. 104
1 I'm going to go through these slides and then go
2 do the actual handing off of the awards.
3 --o0o--
4 CHAIRPERSON NICHOLS: So our next award goes to
5 Dr. Joan Denton. Dr. Denton has 29 years of professional
6 experience and consistent accomplishment in environmental
7 health programs. She recently retired after 13 years as
8 director of the California Office of Environmental Health
9 Hazard Assessment. During this time, she was responsible
10 for the performance of scientific risk assessments for the
11 regulation of chemicals in the environment and for
12 providing information about the health and environmental
13 risks of chemicals to government agencies and the public.
14 As Director, she was also responsible for
15 providing overall scientific guidance and consultation to
16 the Secretary of the Environmental Protection Agency and
17 the Cal EPA Boards and Departments, including ours.
18 Dr. Denton was appointed and reappointed as
19 Director of OEHHA by three different governors. During
20 her tenure at OEHHA, she was instrumental in the
21 identification of diesel particulate matter, environmental
22 tobacco smoke, and lead, just to site three not very
23 controversial items as toxic air contaminants.
24 California's air quality standards for
25 particulate matter, ozone, and nitrogen dioxide were 105
1 revised to include effects on sensitive populations,
2 including children and infants. She also oversaw the
3 implementation of the Safe Drinking Water and Toxic
4 Enforcement Act of 1986, also known as Prop. 65.
5 We're very proud that Dr. Denton was at ARB prior
6 to her serving as director of OEHHA so we can claim her as
7 one of our own. She worked in a number of programs,
8 including the identification of diesel particulate matter.
9 Thank you, Joan Denton, for your important
10 contributions to improving California's air quality.
11 --o0o--
12 CHAIRPERSON NICHOLS: And our third award, we're
13 very happy to be able to present three this year, goes to
14 Dr. Bradley Edgar in the area of science and technology.
15 Dr. Edgar is co-founder and President and Chief Technology
16 Officer of Cleaire Advanced Emission Controls, a company
17 which is based in the San Francisco Bay Area.
18 ARB's diesel regulations have relied on the
19 development and commercialization of retrofit technologies
20 over the last decade. I want to make that point and say
21 it twice. We couldn't adopt that standards that we do if
22 we didn't have the technology that Dr. Edgar has pioneered
23 as a basis for saying this can be done. We have to have
24 that as a part of our standards setting or we could not
25 have been able to move forward as we have aggressively to 106
1 protect public health.
2 His work has pioneered important breakthroughs in
3 developing advanced technologies. Cleaire has emerged as
4 a leader in the diesel retrofit market, having received
5 more than ten ARB verifications for its products and
6 delivering more than 11,000 diesel retrofits into
7 commercial use.
8 Dr. Edgar began researching and working in the
9 field of mechanical engineering nearly 20 years ago and
10 has been the inventor or co-inventor for 11 U.S. patents
11 related to U.S. emission control technology. Dr. Edgar
12 earned a reputation as an industry leader helping to
13 deploy the technology needed to keep California's air
14 clean. He's demonstrated leadership in the California
15 business community, helping to solve environmental
16 problems while also contributing to economic development
17 and job growth.
18 In 2008, Cleaire was awarded the Clean Air Award
19 for technology and research by Breathe California, in
20 recognition of the company's contribution to improving air
21 quality. So thank you, Brad, for your commitment to
22 innovation and clean air.
23 And now I believe we can ask all three of these
24 individuals to come forward and receive their awards and
25 get your pictures taken with James Goldstene and myself. 107
1 And Board members get to ask questions -- you can ask any
2 kind of questions you like or make comments. Let's all
3 have a round of applause.
4 (Applause)
5 CHAIRPERSON NICHOLS: It's really exciting to
6 have the three of you here today. And I just can't say
7 enough about how great it is that we're able at one time
8 to recognize people who have done something in an area
9 which was very controversial at the time that we began.
10 I'm thrilled to say that we have now been joined by many
11 other agencies worldwide in this regard. When we started,
12 it was a lonely path. And each of these individuals I
13 know took a lot of heat in various ways for the work they
14 did and kept true to their science, scientific integrity,
15 and their willingness to serve the public good. So thank
16 you again.
17 (Whereupon the awards were presented.)
18 (Applause)
19 DR. FROINES: I was going to say something.
20 CHAIRPERSON NICHOLS: You have three minutes,
21 remember.
22 (Laughter)
23 DR. FROINES: I'll address the Board. I think I
24 can do three minutes. You know, the longer the talk, the
25 more difficult it is to do a good job. 108
1 So anyway, first, I want to thank the Board for
2 awarding me the Haagen-Smit award. It's truly a
3 significant honor. I will cherish it throughout my
4 continuing career -- continuing career.
5 I'm pleased to receive the award also since I
6 follow distinguished scientists, including our awardees
7 today. And so I'm in a good group of people, and I'm very
8 proud to be part of that group of people.
9 As you know, working in the field of air
10 pollution is complicated and it's controversial. But I'm
11 proud to say it has been an endeavor that I will hold as
12 one of my most important contributions. In particular,
13 following on what Mary said, I want to single out the role
14 of the Scientific Review Panel who have been before you a
15 number of times in the identification of diesel
16 particulate as a toxic air contaminant. As you know,
17 diesel remains controversial, but there is no doubt in my
18 mind as a scientist that it is damaging toxicant which
19 adversely affects people's health.
20 I'm proud of our contribution in the science and
21 believe that the policy decisions the Board and ARB staff
22 have made are very beneficial to protecting the public
23 health. The SRP and OEHHA has addressed more than 300
24 risk assessments during our history, and that puts
25 California in the forefront of toxic air contaminants in 109
1 the United States.
2 As Mary said, I have directed the Southern
3 California Particle Center for twelve years, and we have
4 conducted exemplary research. Our team has demonstrated
5 continuing problems, including cardiovascular disease,
6 neurologic effects, developmental effects, allergic airway
7 disease, and asthma. We've characterized the physical and
8 chemical properties of airborne particulate matter and
9 vapor phased compounds.
10 We have been making important contributions to
11 the mechanisms of disease from air pollutants, and we are
12 developing crucial tools to study the road map -- the road
13 map from upstream airborne exposures to downstream disease
14 and illness. In other words, our research tries to
15 develop the mechanistic underpinnings of health effects.
16 And in particular, we are trying to define with great care
17 the starting point and the subsequent steps that
18 ultimately lead to health effects.
19 We've developed probably ten assays, probably ten
20 quantitative assays, and those quantitative assays have
21 provided important dose response information, and that
22 work continues.
23 I want to just mention two new areas that are I
24 think quite important. Our recent work on the toxicity of
25 vapors, not only particles, have shown important 110
1 toxicologic outcomes. Vapors are toxic, and they have not
2 gotten the attention that they deserve. And in the
3 future, we're going -- we don't regulate the vapors, for
4 example. We regulate diesel particulate, not diesel
5 exhaust. And we need to address the vapor phase in the
6 future.
7 Secondly, our recent AQMD British petroleum
8 funded study on emissions and consequences of rail traffic
9 has produced significant results, and we have demonstrated
10 significant toxicity associated with diesel from rail
11 yards: San Bernardino, Long Beach, and Commerce in
12 Southern California. And so it's not just vehicles we
13 need to be concerned with, but we need to look into the
14 rail issue in greater detail.
15 Again, I'm proud of our work, and I believe we've
16 made substantial contributions. I'm very pleased to have
17 worked with fine scientists, including ARB and AQMD over
18 the past 30 years. I'm very pleased to have contributed
19 to the overall effort. And I thank you again. And I wish
20 you all the best, and I appreciate your recognition.
21 Thank you.
22 (Applause)
23 DR. DENTON: Mary, I think I can keep mine under
24 three minutes.
25 I want to follow John and just echo what he said 111
1 in the beginning. I really want to express my sincere
2 appreciation to the Board for this honor.
3 When I look at the people who proceeded me,
4 whether it be John Holmes in the very beginning, Jim
5 Pitts, Mike Walsh, Margo Oge, Mary Nichols, I mean, so
6 many pioneers, so many people that I really looked up to
7 during my career. And to join that group along with John
8 and Brad, it really is a privilege.
9 And I'm also mindful this isn't the end, that
10 there will be other individuals who will be expressed in
11 the future and to join that group.
12 Like I was saying earlier, it's like a metal of
13 honor from the ARB. It's a great award and how much I
14 appreciate it.
15 As you mentioned in the beginning, I did start my
16 career as a staff person at ARB. So I'm much a product of
17 the ARB. I learned about state government. I learned
18 about bureaucracy. I learned about the role of a
19 regulatory agency. I came in with a science degree. But
20 still, my whatever was honed through my work at the ARB.
21 And I learned about the culture of environmental
22 protection. And I used all of that when I became director
23 of OEHHA where I was fortunate to serve the last 13 years
24 of my career.
25 Many times I've left this building -- when I look 112
1 at all the work that we did and all the work that we've
2 done and all the work that you continue to do, it kind of
3 comes down to me when I left the building or when I would
4 leave the building in the evenings after work, I was very
5 conscious many times of the fact that what I was
6 breathing, I was breathing clean air that I could take a
7 deep breath and I didn't smell exhaust or I didn't smell
8 burning. I mean, the unusual times is when there was some
9 kind of an ag burning or brush fire or something.
10 The fact that you go to other counties and you
11 get off the plane and you immediately begin to smell the
12 air. How much we have to be thankful for for the work
13 that the Air Board and my agency and other regulatory
14 agencies have done in California and why you and why we
15 continue to be leaders.
16 Over the years as my career, I did learn -- as
17 director, I did learn a quote at ARB that I'd like to --
18 and it's not because I was at ARB, but here is the quote.
19 It's "nothing is impossible to the person who doesn't have
20 to do it." I'm sure it was just incidental that I was at
21 ARB at the time. But anyway, I quote that award because
22 there are so many people and so many people in the room
23 here who share in this aware. It is an individual award
24 with my name on it.
25 Without these people's support, without their 113
1 commitment, without their professionalism, without their
2 hard work, I would not be standing here today.
3 So first of all, I would like to have the people
4 who were in the Air Unit at OEHHA who are in the Air Unit
5 at OEHHA to stand and be recognized. Come on, stand up.
6 (Applause)
7 DR. DENTON: And then I would like actually the
8 entire part of the audience that is the OEHHA staff to
9 stand and be recognized. Maybe they didn't work in the
10 Air Unit. But they deserve much of the recognition.
11 (Applause)
12 CHAIRPERSON NICHOLS: You brought your own
13 cheering section.
14 (Laughter)
15 CHAIRPERSON NICHOLS: That's great.
16 DR. DENTON: And finally, I'd also like to
17 recognize two of my relatives who are here, my sister and
18 my cousin: My sister, Janet and my cousin, Peggy. I
19 really appreciate them being here.
20 (Applause)
21 DR. DENTON: So finally, I'd like to say over my
22 years in state service and in the spirit of Dr.
23 Haagen-Smit, I really have come to realize how connected
24 we are to the natural world. We often so much take it for
25 granted in that we many times I think take the approach 114
1 the natural world exists to help our survival.
2 But I have come to believe -- and I think this
3 will be what I'm continuing to do in my future career. I
4 have come to believe the natural world has a right to be
5 protected, and that we -- we are fortunate to be able to
6 do so.
7 So it's this effort to which I have dedicated my
8 professional life, and I'm really grateful to you for the
9 recognition of that. So thank you very much.
10 CHAIRPERSON NICHOLS: Thank you.
11 (Applause)
12 DR. EDGAR: Chair Nichols and members of the
13 Board and staff, thank you for giving me a few minutes to
14 speak. And Chair Nichols, I hope you won't sound the
15 buzzer or put the light on me too soon.
16 CHAIRPERSON NICHOLS: We haven't been counting
17 down the minutes.
18 DR. EDGAR: I felt that too many times in the
19 past.
20 This room and this podium are quite familiar to
21 me. And standing here now, I recall the first time I
22 testified before your Board in 2001. It was just after we
23 started Cleaire, but before the first verification
24 procedure and the first diesel fleet rule for transit
25 buses was even approved. This was the beginning. 115
1 It's amazing to think how much has happened over
2 the last ten years and about how much we have all learned
3 together.
4 To start, I'd like to thank a few people because,
5 for me, this is truly a team award. This is a Cleaire
6 award. But first I'd like to thank my wife and our three
7 children for their love and support. As in any
8 profession, the hours can be long. And for me, it's
9 sometime hard to leave work in the office. So I thank
10 them for their patience and their tolerance. They wanted
11 to be here today, but I told them that CARB meetings are
12 rated PG 13 and that they might not be able to sit still
13 with all the excitement.
14 Next, I'd like to thank the people who supported
15 my nomination, beginning with my research advisor from
16 Berkeley, Professor Bob Dibble, who initially suggested
17 that I be a candidate for this award. And then Professor
18 Bob Sawyer and other of my graduate advisors and mentors
19 in my career, some known to this audience. Kevin
20 Shanahan, the founder and owner of Cleaire; Joe Kubsh, the
21 Executive Director of MECA, who's here today; and also
22 Jack Broadbent, John White, and Diane Bailey who could not
23 be here today. It's been a privilege to know and work
24 with these people, and I'm grateful for their support.
25 Also like to thank my colleagues at Cleaire 116
1 starting with my former classmates and lab mates at the
2 story combustion laboratories at Cal, Dr. Mark Rumminger
3 and Dr. Michael Strikesber. They're world-class
4 combustion and emission engineers, the true heavy lifters
5 on the technical side of our business and absolute
6 believers in the integrity and purpose of our work.
7 I'd like to thank Ellen Garvy, Tom Swenson, and
8 Tim Taylor who helped me broaden my thinking so I can now
9 see how technology and engineering meshes with the policy
10 and regulation of air quality. And more recently, Gale
11 Plummer who became the Cleaire CEO a few years ago. Gale
12 has helped to transform our company from a scrappy
13 start-up into a full scale commercial business. He has
14 provided the adult supervision at the right time in our
15 growth and provided me with invaluable mentoring and
16 support for this process.
17 Most importantly, I'd like to thank Kevin
18 Shannahan, the founder, funder, and visionary leader of
19 Cleaire. And I'll say a little bit more about him in a
20 moment.
21 Finally, I want to thank the Selection Committee
22 for giving me this award. It certainly means a lot to me.
23 I'd also like to congratulate the other award
24 winners, Dr. Froines and Dr. Denton. As Bob Sawyer once
25 told me, good science makes good policy. And to that end, 117
1 I also want to thank you for your great work in science
2 and policy, specifically in the area of diesel emissions.
3 I believe your work has been absolutely fundamental in
4 identifying the harmful effects of diesel exhaust, which
5 in turn has led to a regulatory environment that
6 encourages technical innovation and entrepreneurial
7 reaction, which is the very heart of Cleaire.
8 If I could take just a few more minutes, I'd like
9 to share with you the short version of the Cleaire story.
10 I think it's a great California story and should serve as
11 a case study on how technical innovation and
12 entrepreneurialship can be spurred by strong policy and
13 regulatory leadership.
14 My interest in diesel emissions started a little
15 over 20 years ago when I was a first year graduate student
16 at UC Berkeley and one of Professor Dibble's first
17 students. One afternoon, we were on campus waiting at a
18 crosswalk when a diesel-powered bus accelerated from a
19 stoplight and lugged up a hill. An immensely thick cloud
20 of smoke billowed out of the tailpipe and drifted around
21 the students, the buildings, and the trees. And ugly
22 sight that many of us have seen before.
23 Professor Dibble gave me a nudge and said, "Maybe
24 you should do something about that. And you know what? I
25 might be able to teach you a little bit about how to do 118
1 it." And what a great teacher he was.
2 That was the light switch moment and the uh-huh
3 moment for me that started me down this path of diesel
4 emission reduction. All of receiving my Ph.D. from
5 Berkeley where I worked on a number of diesel-emission
6 related projects, including alternative fuels and exhaust
7 aftertreatment, I worked for several companies in the
8 environmental technology area. There I came to learn
9 about a remarkable technology called the diesel
10 particulate filter, or DPF. As I learned more, I realized
11 that the filters were extraordinarily effective, having
12 the ability to essentially remove all of the particles
13 from the diesel exhaust stream. But at the same time,
14 they require complex strategies to help keep them clean.
15 This is the process we know as regeneration. And that's
16 when things started to get fun, as I realized this is a
17 full-on, no holds engineering effort requiring top level
18 thinking in the areas of catalysis, controls, sensors,
19 fluid dynamics, and heat transfer, the whole bag. It was
20 a playground for a Berkeley combustion scientist, and I
21 felt at home.
22 In 2001, I met Kevin Shannihan, the owner of
23 Cummins West whose company supplies diesel engines parts
24 and service to customers in the northern half of
25 California. At our first meeting, I told him I had ideas 119
1 for developing diesel retrofits devices and a small team
2 of very talented individuals who I thought just may be
3 could build something that would work. Kevin told me he
4 saw the marketplace developing here in California and he
5 wanted to start a company to respond to the needs of his
6 diesel engine customers, while also doing something good
7 for the environment. He suggested that we with join
8 forces. And this was the launching moment for Cleaire.
9 I can't thank Kevin enough for everything he's
10 done. First, on the business side, he provided the full
11 resources of his company and all the financing to provide
12 a safe environment to incubate Cleaire. He made the sales
13 and service organization available to me and my team so we
14 could view the world of retrofit through the lens of the
15 customer. He taught me a lot about the practical side of
16 trucks. This would help shape the transformation of a
17 technology solution into a practical solution that would
18 work in the real world.
19 But beyond the basics of business, I've come to
20 appreciate the value of Kevin's passion and vision, which
21 are vital to keeping these ideas alive. An unnatural
22 patients required to operate in a business driven by
23 policy and regulation, but at all times unwavering faith
24 that somehow, someway we would be successful.
25 I've also learned from Kevin a great deal on the 120
1 personal side, as we shared many victories and a few
2 defeats. He taught me that the idea of honesty, integrity
3 must always be a priority, that there are things more
4 important than just running a business and making money.
5 And to that, I'm extremely grateful.
6 Cleaire has been a journey, and I'm grateful that
7 despite some delays and setbacks along the way, this Board
8 has largely stuck to your plan to regulate the end use
9 diesel population in California and we've been able to
10 manage the challenges of application engineering and the
11 challenges of a complex verification process.
12 Now ten years into Cleaire's life, the company
13 has sold more than 13,000 retrofits. We've upped the
14 number since the application. We are a market leader in
15 California. The company is on solid financial footing
16 with operations in the Bay Area and San Diego. Our
17 company has created hundreds of green color jobs within
18 the state to support the design, to manufacture
19 installation and support of diesel retrofit devices. And
20 now we're starting to explore international opportunities
21 as our reputation and the reputation of CARB's diesel
22 retrofit program is spreading.
23 To me, Cleaire is a great California success
24 story. You, the ARB, recognize the severe health impacts
25 of diesel emissions and took actions to passing of 121
1 regulations to clean up the in-use fleet of diesels. Our
2 engineering team was educated and prepared by the State's
3 university system to solve one of the great problems of
4 the state.
5 A visionary entrepreneur, Kevin Shannahan poured
6 his heart, soul, and capital into launching the company
7 with a belief that he could provide a solution to his
8 customers. High quality jobs and economic benefit is fed
9 back to the state, and all the while the air gets cleaner.
10 Cleaire is the story about California's coming
11 together to solve problems. The best part is that the
12 story doesn't end here. In fact, it's just beginning. I
13 believe that in the next five to ten years our in-stream
14 will play a role in the near elimination of diesel PM
15 emissions in the state. I believe our business will
16 expand throughout the country and the world, helping
17 others solve air quality problems while bringing economic
18 prosperity to California through the creation of more
19 jobs. This is a vision and a plan that I'm immensely
20 proud to be part of.
21 Thank you.
22 (Applause)
23 CHAIRPERSON NICHOLS: What a wonderful way to end
24 our meeting. You really do us all honor by your work, and
25 it's been a terrific partnership. So thank you. 122
1 And we will be adjourned.
2 (Whereupon the Air Resources Board meeting
3 adjourned at 12:08 PM)
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25 123
1 CERTIFICATE OF REPORTER
2 I, TIFFANY C. KRAFT, a Certified Shorthand
3 Reporter of the State of California, and Registered
4 Professional Reporter, do hereby certify:
5 That I am a disinterested person herein; that the
6 foregoing hearing was reported in shorthand by me,
7 Tiffany C. Kraft, a Certified Shorthand Reporter of the
8 State of California, and thereafter transcribed into
9 typewriting.
10 I further certify that I am not of counsel or
11 attorney for any of the parties to said hearing nor in any
12 way interested in the outcome of said hearing.
13 IN WITNESS WHEREOF, I have hereunto set my hand
14 this 9th day of August, 2011.
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22 TIFFANY C. KRAFT, CSR, RPR
23 Certified Shorthand Reporter
24 License No. 12277
25